Texas Power Outages impact on the market - Feb 16
Posted: Tue Feb 16, 2021 11:37 am
From BofA Equity Research 2/16/2021
ERCOT begins rotating outages as supply outstripped
After years of debating about scarcity conditions among investors, ERCOT has implemented rotating outages due to supply constraints after sharp cold weather has resulted in limited renewable contributions (iced wind blades, snowed-in solar, and harsh weather conditions reducing gas plant outages), against backdrop of near all-time peak demand projected for today/tomorrow (+15GW above projected winter peak). This morning 1.4 million people in the Houston area alone where without power.
Serious implications for planning & climate debates
The long-term implications for TX and nationally are not trivial. TX is a leader in renewables adoption and the latest power outages highlights the lack of coordinated planning. Retaining the existing thermal/fossil portfolio of power plants in the state (coal, gas, even oil) that have been retired in Texas in recent years seems the clearest outcome alongside a focus on fuel availability: ‘winterization’ will be a key buzz word for gas & wind. The question remains whether there is any appetite to return to a capacity market; we see this (or some similar construct) as increasingly likely with growing renewable penetration unlikely to abate. Also expect substantial consternation on any clean energy standard (CES) debate at a national level and see this event materializing in the midst of debate on climate efforts as substantially stymying efforts in coming months. On balance, expect lots of (negative) repercussions across numerous central states.
MY TAKE: The "Green New Deal" is extremely dangerous because anyone standing in the way or even having a rational discussion of how much wind and solar should be part of the power supply is considered EVIL. My guess is that over 100 people will die in Texas because of lost power and heat in their homes.
Read: https://www.houstonchronicle.com/news/h ... 954041.php
ERCOT begins rotating outages as supply outstripped
After years of debating about scarcity conditions among investors, ERCOT has implemented rotating outages due to supply constraints after sharp cold weather has resulted in limited renewable contributions (iced wind blades, snowed-in solar, and harsh weather conditions reducing gas plant outages), against backdrop of near all-time peak demand projected for today/tomorrow (+15GW above projected winter peak). This morning 1.4 million people in the Houston area alone where without power.
Serious implications for planning & climate debates
The long-term implications for TX and nationally are not trivial. TX is a leader in renewables adoption and the latest power outages highlights the lack of coordinated planning. Retaining the existing thermal/fossil portfolio of power plants in the state (coal, gas, even oil) that have been retired in Texas in recent years seems the clearest outcome alongside a focus on fuel availability: ‘winterization’ will be a key buzz word for gas & wind. The question remains whether there is any appetite to return to a capacity market; we see this (or some similar construct) as increasingly likely with growing renewable penetration unlikely to abate. Also expect substantial consternation on any clean energy standard (CES) debate at a national level and see this event materializing in the midst of debate on climate efforts as substantially stymying efforts in coming months. On balance, expect lots of (negative) repercussions across numerous central states.
MY TAKE: The "Green New Deal" is extremely dangerous because anyone standing in the way or even having a rational discussion of how much wind and solar should be part of the power supply is considered EVIL. My guess is that over 100 people will die in Texas because of lost power and heat in their homes.
Read: https://www.houstonchronicle.com/news/h ... 954041.php