In the chill of today's sub-freezing temperatures, owning energy storage in Texas becomes a profitable venture, especially during extreme weather. Texas' deregulated energy market fosters private competition in energy generation, making batteries increasingly attractive amid the rise of intermittent renewables. Storing energy during surplus times and discharging it during peak demand adds significant value.
On January 15th, the real-time market price surged to near the $5k per MWh price cap in certain places in certain Texas locations due to heightened demand from the cold weather, a substantial increase from the typical $150 MWh on regular days. This variability in prices is driven by supply imbalances across the state, primarily influenced by local weather conditions and transmission limitations. See chart below for a heatmap of real-time prices across texas. Source ERCOT https://www.ercot.com/gridmktinfo/dashboards.
The challenge lies in managing supply and demand dynamics, crucial in the electric grid to avoid forced blackouts. Texas utilizes three mechanisms – the Day Ahead Market (DAM), real-time market, and ancillary services – to match demand with supply. ERCOT forecasts demand in the DAM, while ancillary services provide additional capacity to address demand variability. The real-time market serves to shore up gaps when demand exceeds forecasts, prompting ERCOT to purchase the necessary energy supply to keep the grid stable.
Regional price variability in Texas is due to supply imbalances caused by congestion. Certain regions, like the south and west, generate more wind energy due to windier conditions. However, limited transmission lines restrict the number of electrons transmitted, emphasizing the influence of local weather and production on meeting local demand.
If you own batteries a “cold” day is a good day. the intricate dance between supply and demand in the Texas energy landscape is key to navigating and capitalizing on this dynamic market. #TexasEnergy #Renewables #EnergyMarket 🌐🔋
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