Take My Megawatts Please

Slate  reports on the “only in Texas” phenomenon where electric power was actually cheaper than free this week.

In the wee hours of the morning on Sunday, the mighty state of Texas was asleep. The honky-tonks in Austin were shuttered, the air-conditioned office towers  of Houston were powered down, and the wind whistled through the dogwood trees and live oaks on the gracious lawns of Preston Hollow. Out in the desolate flats of West Texas, the same wind was turning hundreds of wind turbines, producing tons of electricity at a time when comparatively little supply was needed.

And then a very strange thing happened: The so-called spot price of electricity in Texas fell toward zero, hit zero, and then went negative for several hours. As the Lone Star State slumbered, power producers were paying the state’s electricity system to take electricity off their hands. At one point, the negative price was $8.52 per megawatt hour.

Impossible, most economists would say. In any market—and especially in a state devoted to the free market, like Texas—makers won’t provide a product or service at a negative cost. Yet this could only have happened in Texas, which (not surprisingly) has carved out its own unique approach to electricity.

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One thought on “Take My Megawatts Please

  1. rreive

    same thing happens in Alberta, Canada the wind farms need to integrate small ng driven generation to fill their baseline contract obligations and bid in spinning reserve when the wind is not blowing and in this case wind needs to turn off and let ng kick in on demand as needed. So it’s a bad setup right now on Texas And Alberta.

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