The immediate future for the ERCOT grid is not bright and as more wind and solar is added to the grid, Texas will rely more and more on aging coal and natural gas power.

The Public Utility Commission of Texas (PUC) is considering market reforms for the electricity market administered by the Electric Reliability Council of Texas (ERCOT). The suggested approaches will not fix the problem they hope to solve. Why? Because they have not addressed the root problem, that the regular ERCOT market does not allow generators to earn a competitive return on capital.

All electricity markets in the U.S. are government administered constructions. In Texas, ERCOT administers an “electricity only” market in which the generator companies are only paid when they generate electricity for the grid. Because an electron is an electron, and ERCOT first accepts the lowest cost electricity offered by generators, many older generating plants with higher cost operations are priced out each day. They do not earn revenues to offset their payrolls and maintenance expenditures. They do not pay their shareholders a return on capital.

(Source: LinkedIn) “ERCOT and the PUC cannot persist in their unsubstantiated belief that short-term price spikes provide the “economic signals” that encourage the commitment of long-term capital. This is not the way the Wall Street operates.” – Ed Hirs

Source ~ https://www.hartenergy.com/exclusives/opinion-texas-grid-still-not-fixed-203292