August 8th, 2021

Electricity security

Well, that was not a good look was it.
​Lights out and prices at $220k/MWh or $220/kWh.
​That is, turn on your average light for an hour and it is costing someone $22. Probably not you, unfortunately.
$22 is more than half the world's people earn in a day.
What happened?
Start with market design, don't end there.
Rather than focus on wind that is not blowing, and a cold night, focus on the different drivers between a separated generator and a separated retailer against the status quo, vertically integrated gentailers.
The latter are there to match their own book. They are not thinking value maximisation.
Any generator with their eye on the prize would have had their plant on standby.
Vertical integration creates laziness.
Markets deserve better than that.
Please do not cloak this behaviour in terms of the market working as it should.
It did not because it was not structured to work properly.
Real markets work much much better.
​Please regulators, get us there before markets themselves become the scapegoat.

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