This is comparing realized hourly load against predicted load based on the weather, time of day, day of week, etc. etc. ERCOT reports this for 8 different weather zones, and many markets break their total system load into separate areas, so about 100 are plotted here.
A couple of standouts: *YIKES* Permian basin!
You can see that wells (that use electricity for their pumps) in the Permian shut in when prices spiked over the weekend.
Meanwhile, across the border in El Paso Electric territory:
The Texas coast really got hit:
Sunflower Electric in Kansas also came up short on the 17th, but duration matters a lot here. (It's also a small area).
Note that predictions here are all out of sample--actually based on data from 2017-2019. It is then normalized to be mean zero for January 2021.
The Permian was still largely offline on Friday, even as prices returned to normal.
Perhaps more worrying is that the coast is still way below normal while temps are still around freezing. The load profile looks more normal, so I would guess this is reduced usage, not grid interruption. That could indicate damaged homes still dark, or fear of bill shock.
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To complement @ben_moll's excellent thread on EU firms and households substituting away from gas, here are some examples of governments actively discouraging adaptation to scarcity.
They're using taxpayer funds to make the problem worse.
This is not even close to a proportional response, and pretending it is invites further aggression.
The EU has made itself exceptionally vulnerable to Russian gas supplies, and this goes a long way towards explaining why they are behaving so pathetically
Imperfect Markets versus Imperfect Regulation in U.S. Electricity Generation
When I first started learning about electricity markets, I was surprised to learn that we used such dramatically different processes to keep the lights on in the US:
In some places, utility engineers do it as they always have, in others they run auctions.
I was also surprised to learn that we didn't actually know whether the market-based system raised or reduced costs.
On one hand, firms exert market power by "calling in sick" with their low-cost units, requiring expensive units to make up the difference.
There's an important paper on automation and inequality out today in AEJ:Macro.
It's elegant, it has kickstarted research on automation, and yet it's also under-appreciated.
So here's an appreciation thread:
Before Hemous & Olsen, we thought about skill-biased technological change (SBTC) as something that enhanced the productivity (and increased the wages) of high-skill workers.
Productivity growth among a subset of workers raises inequality.
This could explain a rising wage premium for high-skill workers, but there was a huge hole:
In my 2015 AER, I examined *when* regulation distorts costs by looking at the prices power plants paid for fuel.
I found it depends on cost-reducing opportunities and focused on the difference between natural gas and coal: Gas is homogeneous and traded on open markets, while coal varies along dimensions of heat, ash, sulfur, etc. and tends to be sold in bilateral contracts.
I'm glad to see a discussion of the culture in economics seminars. A little history (and possibly folklore) on how we got here: Why "We don't clap."
The possible folklore part is that the modern economics seminar format has its roots at @UChi_Economics. At least that's what people there say. They weren't seminars, they were workshops.
The difference is that in a workshop all participants were expected to have read the paper.
It wasn't a presentation, it was a discussion of a paper that everyone had read. Imagine everyone participating in a 90 min discussion, giving the author feedback on their paper and then clapping at the end. Clapping for whom?