Share this page!

(((Alex Gilbert))) Profile picture
Twitter logo
15 Feb, 20 tweets, 7 min read
1. Extreme winter weather is causing rolling blackouts in Texas which may continue through Monday and potentially Tuesday.

@ERCOT_ISO declared an EEA 3. This is a very dangerous grid event, so please don’t rush to judgment about causes. It is complex
2. When California suffered rolling blackouts last summer, @MBazilian and I cautioned that such events are complex.

Invoking pre-existing beliefs about energy market design, capacity markets, and fuel types are not necessarily correct (and insensitive) utilitydive.com/news/californi…
3. The proximate cause for rolling outages is extreme winter weather, the worst winter storm in Texas in decades.

The energy system in Texas is built to meet summer peaks, not rare winter storms of this severity @joshdr83 @Caitlin0903 forbes.com/sites/joshuarh…
4. This has led to electric demand projections for Monday as high as 74 GW. This would be an all-time record high electric demand, even compared to summer. However, it probably won’t be realized because of insufficient electric supply (source ercot.com)
5. This very high demand has led to very high day-ahead and real-time electric prices throughout the state over the weekend and through Tuesday. Prices are 50 times or so more than normal
6. The first place to start analysis is with the final winter Seasonal Assessment of Resource Adequacy.

Two things emerge. First, current conditions are much worse than the extreme weather case. Second, outages may be worse than their worse case scenario ercot.com/news/releases/…
7. The vast majority of the time, reliability issues are caused by transmission and/or distribution disruptions.

Undoubtedly there will be distribution disruptions but the current event is one of the few where supply disruptions are primary drivers
8. Put simply, there are not enough power plants operating to meet electric demand. While some will claim this is because of poor renewables, not enough nuclear, or coal retirements, the reality is it is a system-level issue
9. As Texas rarely sees such temperatures, electric and energy systems are generally not weatherized to handle such events.

Wind turbines are icing because they need special preparation for cold weather conditions, rarely experienced in ERCOT nrcan.gc.ca/energy/energy-…
10. Natural gas prices have already soared because winter energy demand means that pipelines are full. One unappreciated part of the coal-to-gas transition is that the power sector took advantage of empty pipelines paid for by winter heating customers naturalgasintel.com/natural-gas-ma…
11. This means that most power plants do not have firm contracts for gas delivery and, in winter cases such as this, don’t necessarily have supply. From a resource perspective, this is still a fossil dominated system, and a natural gas one at that.
12. Both nuclear and coal are maxed out on generation and its still not helping. Nuclear capacity in Texas is less than 10% of current demand, and it is not a peaking resource, which is the challenge here.

Coal is vulnerable to frozen coal piles and other weatherization issues
13. These blackouts will immediately ignite a long-standing debate about capacity markets versus energy-only markets with high scarcity pricing @gavinbade utilitydive.com/news/the-great…
14. It is way too early to say anything about that. Beyond market design choices, the bigger decision is the target reserve margin (i.e. how much extra capacity do you have compared to demand). ERCOT typically has the lowest in the country
15. It is not clear that either a capacity market or an energy only market would be able to address two of the primary causes of the current event: a lack of power plant level weatherization and electric planning that does not account for gas delivery limitations
16. These issues are potentially exacerbated because ERCOT’s electric grid is essentially isolated from the rest of the country. Greater integration generally reduces risks of events like these
17. However, in this case, extreme weather is also occurring in adjacent ISOs SPP and MISO. It is possible that those areas suffer from energy supply limitations as well
18. For me, there are three things to watch for: First, can the system maintain power with rolling outages? This is a public health and safety emergency and people may die if there is an uncontrolled blackout
19. Second, can energy conversation, induced by very high prices and consumer electric conservation, help reduce the severity of the blackouts on Monday and Tuesday? Over the summer, we saw this happen in California once people understood the challenge
20. Third, what is the rate of forced outages and the primary causes, particularly for gas plants? If gas plants aren’t operating due to a lack of pipeline availability in the oil and gas capital of the U.S., we need to reevaluate fuel supply as a risk to resource adequacy

• • •

Missing some Tweet in this thread? You can try to force a refresh
　

Keep Current with (((Alex Gilbert)))

(((Alex Gilbert))) Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!

PDF

Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @gilbeaq

(((Alex Gilbert))) Profile picture
14 Feb
For reference, ERCOT's final winter SARA showed an extreme winter demand scenario just shy of 68 GW ercot.com/news/releases/…
It estimated it could still meet demand with severe outages of about 14 GW, out of a total capacity of 82 GW.

With projections for early next week in the mid-70s, it's going to be very tight.
Much like the polar vortex of 2014 that hit the East coast, fuel supply induced outages could determine whether there are rolling blackouts.

ERCOT is worrisome as they typically don't have the same plant weatherization. That and they don't have a regional grid
Read 4 tweets
(((Alex Gilbert))) Profile picture
6 Oct 20
A new article by Sovacool et. al. in Nature Energy claims nuclear energy is not associated with lowering GHG emissions while renewables are.

The article's analysis does not support this contention but rather reflects the dynamics of global energy poverty nature.com/articles/s4156…
To start, the authors admit that their study is correlation and not indicative of causation.

However, they then base their analysis and conclusions on the inference of causation. Such logical leaps should not have made it past peer review. Here's why:
At the core the article just does a regression of non-transportation CO2 emissions per capita versus nuclear and renewable energy use.

This is immediately suspect as nuclear and renewables are primarily for the electric sector
Read 12 tweets
(((Alex Gilbert))) Profile picture
12 Aug 20
Nuclear energy is really not a competitor with renewable energy.

It's primary competitor in most nations is coal and natural gas. In the US, it is increasingly natural gas.

Existing plants are not closing because of new renewables but because gas has driven prices down
And I really wish the nuclear industry would get it out of their head that renewables aren't reliable.

Reliability is a system-level characteristic. You can design systems with high levels predictable variable energy resources that are as reliable as high levels of dispatchable
If you want to build a nuclear plant in the future, you should primarily be concerned about how competitive you are with gas.

Right now it is cheaper, more flexible, and less risky.
Read 7 tweets
(((Alex Gilbert))) Profile picture
21 Apr 20
We are straight up in black swan territory for oil markets. Negative pricing on an expiring contract is one thing, a 50% fall in the primary WTI contract is another.

Its really hard to emphasize how unprecedented the situation is. The harder the crash, the worse the rebound
Regulators and even the mercantile exchanges need to seriously consider halting trading. The physical market oversupply may require massive global shut-ins and current trading dynamics could cause unimagineable futures prices
There is an outside chance the USO, which owns ~1/3 of June oil contracts, might liquidate. Today's price action even suggests they are already. Imagine what happens to prices at $10/barrel when 1/3 of the futures contracts are forced out. Yesterday's -$37/bbl might not be a low
Read 8 tweets
(((Alex Gilbert))) Profile picture
20 Apr 20
Oil is almost down to $1/barrel. Since many are not familiar with oil markets, its important to note why this is happening.

The May contract expires tomorrow. If you have a May contract at expiration, you must take physical delivery of 1,000 barrels of oil at Cushing in Oklahoma
Oil traders that still have contracts are selling at whatever price they can get because they do not (all) have the ability to take physical delivery.

Storage and refiners are not buying. The $1/barrel is a trading dynamic when there are many sellers and limited buyers
This is important: THE REST OF THE FORWARD CURVE HAS NOT CRASHED. The curve is down but the contract for June delivery is still at $22/barrel and July is at $27/barrel.

The $1/barrel May price may mean that storage is fully contracted but it is not clear yet
Read 6 tweets
(((Alex Gilbert))) Profile picture
9 Mar 20
1. In the last two weeks, oil prices have almost halved due to Coronavirus’ threat to the global economy and the decision of OPEC+ to no longer control oil prices. Here’s a thread of resources and other threads explaining what’s what
2. As of this morning, WTI is trading around $32/barrel, >20% lower than Friday and the lowest price since 2016, as well near lows from the depths of the Great Recession and the early 2000’s.

Brent, the international benchmark, is not far off. (WTI, source EIA)
3. The short explanation is soaring US shale production challenged Russia and Saudi Arabia, who collaborated to constrain supply to keep prices high.

After years of losing market share, they stopped that collaboration. This thread goes into depth
Read 22 tweets

Did Thread Reader help you today?

Support us! We are indie developers!

This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Too expensive? Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal Become our Patreon

Thank you for your support!

Follow Us on Twitter!

Like this author's thread?

Get emails when @gilbeaq has new unrolls!

Check out other threads from @gilbeaq!

Read all threads by @gilbeaq