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Top 3 Misconceptions about the Texas Power Market

John Reid's picture
John Reid 156
CEO Evergrid

Previously Head of Trading - ERCOT, CAISO, and SPP.

  • Member since 2021
  • 5 items added with 1,661 views
  • Mar 4, 2021
  • 572 views

There is a fair amount of misinformation about ERCOT's market design. This primer touches on the most common misconceptions.

Top 3 Misconceptions about the Texas Power Market

ERCOT is an energy-only market - FALSE!

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Source: www.linkedin.com
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Matt Chester's picture
Matt Chester on Mar 4, 2021

2) ERCOT is not connected to other power grids - FALSE!

This is an important one to point out, but at the same time if those connections aren't used during a time of crisis then what good are they really serving? 

John Reid's picture
John Reid on Mar 4, 2021

Why do say they weren't used?

Matt Chester's picture
Matt Chester on Mar 4, 2021

My understanding was that at these interconnections, minimal power actually found its way from outside ERCOT to the areas in need. Was that not the case?

“They don’t have the infrastructure connected outside of Texas that might allow them to bring in imports of energy,” said another source familiar with ERCOT and electric markets.

John Reid's picture
John Reid on Mar 5, 2021

If it's economic, traders will flow power on all the DC ties to ERCOT from other regions. 

In addition, there's an enormous amount of generation capacity that can switch between regions that are connected to the eastern & western grids (based on similar economics as the DC ties).

 

 

Mark Silverstone's picture
Mark Silverstone on Mar 5, 2021

I´m lost here. So, why didn´t ERCOT get power from other regions to supply their customers? Too expensive?

Bob Meinetz's picture
Bob Meinetz on Mar 10, 2021

"ERCOT interties are DC lines, not AC lines. DC lines are one-way (bi-directional) lines, while AC lines balance electricity pools on both sides and can not regulate directional flow. This nuance gives ERCOT the ability to claim (rightfully so!) that no power transactions are interstate."

John, either A) Texas generators are never compensated for exported DC power, and imported DC power is free, or B) Texas is conducting interstate business, and is subject to FERC regulation.

Seems Texas generators who are sending power out-of-state might have a problem with A.

John Reid's picture
Thank John for the Post!
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