As Texas baked in a heat wave that caused power demand to surge to record highs, Victoria appeared to be awash in low energy prices.
At least, that’s what it looked like on one map charting real-time prices Aug. 13 at certain locations across the state. The prices are recalculated at 15-minute intervals.
Contrary to a recent Bloomberg report claiming Crossroads plants were “basically giving the stuff away for free,” John Packard, manager of power supply at South Texas Electric Cooperative, said he was selling power at upward of $8,000 per megawatt hour for most of the day.
That is less than the $9,000 price tag across most of the state, but it’s still about 800 times as expensive as normal Texas summer power prices.
The temporary price dip in the Crossroads was caused by congestion as a result of temporary over-generation in the grid.
When you hear reports about electricity usage soaring in Texas, do you try to conserve?
ERCOT, the state’s power regulator, is normally able to transmit power across the grid without any trouble, said Ryan Castleman, chief operating officer at Agilon Energy.
“I wasn’t happy with it on that day while that outage was going on,” Castleman said. “Under normal conditions there’s plenty of transmission infrastructure. ERCOT is very good at distributing power.”
Although ERCOT doesn’t own transmission lines, it regulates power distribution across the state to prevent overloads, which can lead to widespread blackouts.
“We had to reduce generation output in the Victoria area on that day to prevent overloading the transmission lines,” said Leslie Sopko, a spokeswoman for ERCOT. “However, power was flowing across the transmission lines to the rest of the system, and we were able to serve the load.”
To reduce output, ERCOT can ask private plants, which have their own generators, to halt generation.
“Formosa Plastics Corporation, Texas, generates our own electrical power using natural gas. However, Formosa generally has to purchase electrical power from the grid,” Steve Marwitz, a Formosa spokesman, wrote in a statement. “We support the Electric Reliability Council of Texas (ERCOT) and when needed, per their request, help with the load on the grid. This occurs any time of year but especially during hot summer months and is typically accomplished by either cutting our consumption or by exporting to the grid.”
High demand in hotter months creates favorable business conditions for companies like Agilon Energy.
Gürcan Gulen, an energy economist at the University of Texas, said the high prices across the state of Texas are an indication of a widespread trend toward renewable energy resources like wind and solar.
The trend away from natural gas creates high demand on days like Aug. 13, when Texas saw little wind blowing.
That’s when plants like Castleman’s kick in. Castleman said his plants operate only at peak demand, or about 10% of the time.
During the summer, that comes out to about 10 hours per day.
Another one of Castleman’s plants, located in downtown Victoria, will begin to operate by Nov. 1.
Castleman said he is tentatively planning another plant at the Port of Victoria.