1. How a Cold Day in Texas Exposed the Value of Grid Flexibility

    How a Cold Day in Texas Exposed the Value of Grid Flexibility

    As the sun rose over Dallas on March 3, 2014, thermometers read 15° Fahrenheit. Across the state, Texans turned their heaters on full blast as they prepared to head to work. Meanwhile, at the operations center for Texas’ electricity system, ERCOT, operators saw the price of electricity skyrocket. Around 8 a.m. prices jumped to nearly $5,000 per megawatt-hour, more than 100 times the average price of electricity. Though the unusually cold weather caused electricity demand to increase well above historical levels, the power market behaved as intended. Many power plant owners, who know their capacity is typically not needed during this time of year, had their plants offline for maintenance. Thus, when a period of unusually high demand on March 3 combined with relatively low supply, prices skyrocketed, demonstrating the fundamentals of supply and demand. Power plants that were available and able to turn on quickly -- to be flexible -- were rewarded handsomely.

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