Views Supporting Capacity Markets

Views Supporting Capacity Markets

Any opinions voiced in the articles linked below are those of the article authors only, and not necessarily endorsed by Competitive Assets

• Feb 11, 2014: Despite Sufficient Reserves, Texas Power Providers Warn Of Rolling Blackout Risk
• Feb 10, 2014: Brattle FERC Report: “Energy-Only Markets Can Attract The Optimal Level Of Generation Investments”
• Capacity Market Fight Takes to Advertising Pages
  Copyright 2014 by Competitive Assets, LLC. All rights reserved
• On 1/9/14, Austin American Statesman carried a full page ad from a new group, Texans for Reliable Power, alleging that “Texas is on course for a power reliability crisis, with the potential for regular rolling blackouts in just a few short years.” The ad also states that “special interests” opposed to changes “are largely unaffected by blackouts, under the current system,” and provides a PUCT customer line email for contact. The group includes NRG Energy, Calpine Corp., NextEra, and Exelon.
• Jan 9, 2014: Rolling Blackouts Are Texas’ Future Without Reform, Generators Say
• Oct 30, 2013 :Energy Storage Providers Support a Capacity Market for ERCOT
  Copyright 2013 by Competitive Assets, LLC.  All rights reserved
  The new filings in Project No. 40000, related to resource adequacy, are a presentation by Tom Pierson of Texas Energy Storage Alliance (TESA), and comments by Robert Klein of VdE Corp.  Both support creation of a capacity market in hopes that their technologies could be utilized under such a market construct.  The TESA presentation focused on accurately measuring capacity of gas turbines during peak times, explaining that “ERCOT’s peak power supply decreases, as temperatures increase (at 100°F, a gas turbine may have lost up to 20% of its nameplate capacity).”  Accurate measurements and a corresponding market value would ensure adequate summer peak capacity, according to TESA. VdE Corp. develops sustainable, low-pollution energy, and is currently working on “one or more Closed Loop Pumped Storage (CLPS) projects in the Texas Panhandle, near Tulia.”  Closed cycle, limited aquatic resource impact pumped storage facilities represent a sustainable, zero pollution technology for converting wind and solar generated electricity into dispatchable power.  Clean-wind-generated electricity is purchased in the surplus, off-peak hours to pump water to the upper reservoir at night (when the wind-generated electricity would otherwise have been unused); and this stored water is run back downhill in the daytime on-peak hours to generate scarce, valuable on-peak electricity. 
• Oct 25, 2013: Oxer, Parsly, and Wood: Texas’ Deregulated Power Market Should Evolve To Meet Future Challenges
• Former FERC Chairman Kelliher on Texas Resource Adequacy Solutions
  Copyright 2013 by Competitive Assets, LLC.  All rights reserved
  The 10/22/13 edition of the Austin American Statesman carries an opinion piece by the former Chairman of FERC, Joseph T. Kelliher, on the need for Texas to implement “smart electricity reforms.”  He writes that reliability is valuable and necessary, but comes at a price, and the challenge for Texas is to figure out how to pay for it.  While the energy-only market has worked in Texas in the last ten years, “…short-term prices can and do sharply increase.  The potential for enormous price spikes inevitably leads to “price caps,” which ironically discourage the development of the planning resources needed for the longer term.  This negative feedback loop has played out in other states – notably California – resulting in supply inadequacies with disastrous results.” He states that “the experience of other regions suggests that a planning reserve market, otherwise called a capacity market, will ensure electricity reliability at a reasonable cost – if Texas can avoid the mistakes of other regions.”  The best procurement period would be at least five years, which would help with long-term planning.  In his view, limiting a capacity market to new resources only or for congested areas is not recommended.  
• Oct 2, 2013: Tanton: Texas Should Switch To A Capacity Market To Ensure Reliability
• Sept. 16, 2013: ERCOT Resource Adequacy Issues Might Get Resolved?
  Copyright 2013 by Competitive Assets, LLC.  All rights reserved
  A 9/14/13 article in the Austin American Statesman discusses how the questions of resource adequacy in ERCOT might get resolved.  It refers extensively to the Charles River Associates study, filed by NRG, which put the cost of a capacity market at $400 million more than the energy-only market, but also projected savings of $14 billion over 15 years.  The author writes: “Bottom line:  NRG’s study claims the higher costs of a capacity market ‘are more than offset by the projected savings, reduced outage costs and statewide economic benefits of more reliable electric generation.’  The study puts the savings to the Texas economy at $14 billion over 15 years.  ‘It more than pays for itself,’ Ragan says.  I assure you the opponents won’t agree.  I won’t venture a guess whose economist is right, but I’ll add a little context.  The $14 billion over 15 years pales when you consider that the Texas economy’s gross domestic product is about $1.4 trillion.”
• Sept. 12, 2013: Texas Generator Pushes for Capacity Market Day After Capacity Market RTO Forced to Involuntarily Shed Load Due to Inadequate Supply
• August 28, 2013: NRG Study: Texas Will See Outages, $14 Billion in Losses Under Current Electricity Market
• July 14, 2013: Opinion: The Case for a Texas Capacity Market
• June 14, 2013: NRG Seeks Capacity Market for Texas
• June 13, 2013:  NRG Admitted in an Op-ed Deregulation Is a Colossal Failure
• Former FERC Chair Explains Why a Capacity Market is the Answer in ERCOT
• Feb 21, 2013: Competitive Generator Says Competitive Retail Market, With Transient Customers, Can’t Support “Investment,” Innovation