The "deregulated" energy industry is built around that exact principle you're talking about, both in the US and the EU. The "platform" is the grid, which delivers electricity from plants to homes and businesses. Because competition in this area is limited, these companies are regulated monopolies, whose infrastructure decisions and rates are closely supervised by a government energy board. These entities work as part of a regional transmission organization, a highly regulated entity that ensures stability of the grid as a whole (https://en.wikipedia.org/wiki/Regional_transmission_organiza...).
Generators and users of electricity operated on top of that platform. Generation is a competitive market--many entities can be delivering power into the grid, and the product is fungible. Users don't care where the electricity comes from, just about the price. Electricity generation is therefore quite suitable for market mechanisms.
What happened in Texas was not an example of a privatized "platform" failing. The platform (the grid) was fine. Instead, adverse weather events caused a shortage of the product (electricity) running on top of the platform. Put differently, this is not like a scenario where Texas decided to privatize roads and things went sideways. It's like a scenario where packages didn't get delivered on Christmas because COVID caused an unexpected spike in demand for package delivery, as well as an unexpected shortage of drivers for delivery vehicles.
I thought energy generation is still regional in practice -- loosely, the further it goes, the more expensive -- and private co's deciding to cheap out on weather protections showed the king has no clothes in this case? grid sounds nice and platform-y, but when you zoom in, similar to us telcos: not quite as stable and abundant as the lobbyists advertise for any given region when you look.
as an intuition, a solar panel farm in some isolated arizona desert doesn't help folks in maine. conversely, as neither region has that many local suppliers, a few private businesses making rational personal $ decisions to not supply in critical scenarios will put all citizens at risk when those scenarios happebs.
(written as someone living through periodic wildfires allowed through similar market optimism.)
> thought energy generation is still regional in practice --
ERCOT serves over 26 million customers in Texas. That's more than large enough to have a highly functioning market.
> and private co's decided to cheap out on weather protections?
What on earth makes anyone think that government-owned power generators in Texas would have invested in weather protections? The sewer systems around the country are publicly owned, yet the public utilities "cheap out" on capacity and routinely dump massive amounts of raw sewage into local waterways during big rain storms that happen every year or two. People are attributing to the structure of the market a failure that's more about the inability of entities in general (public or private) to deal with black swan events.
RE:market size, esp. proportional to texas land mass, that's not obvious to me. But I'm writing that as a not-an-energy person, just someone who spent an afternoon googling years ago to understand why energy operations people viewed things like solar/wind/etc. as local, not national. Finance and other non-operational people can certainly work more abstractly.
RE:Weather, when gov-funded climate change scientists collectively predicted adverse weather phenomena would continue accelerating in accordance to global warming, and a lot of communities have been living through it? I started hearing about that 10-20 years ago, it's not news. Next you'll tell me that continued beachfront erosion merits gov bailouts of insurance companies because we couldn't predict that either..
Big rainstorms are not news, yet most public sewer systems are totally unequipped to deal with them. Hot days in summer are not news and yet Amtrak is unequipped to deal with them (http://blog.amtrak.com/2015/06/heat-restrictions).
Around the country, there is a $4.5 trillion infrastructure backlog.https://www.asce.org/templates/press-release-detail.aspx?id=.... Almost all of that backlog is on the plate of public entities (road works, sewer works, bridges, etc.) Where do you live that the government has actually addressed crises that it faces in the present and has time to pro-actively address stuff scientists are talking about happening years in the future?
Yeah, maybe competent and pro-active bureaucrats at a government power utility would have avoided this problem. It also could have been avoided by running power plants on unicorn manure, which I hear has natural anti-freeze properties.
This feels like rapidly shifting goalposts from my statement about energy being local and the local private energy companies cheaping out because they could
Yes, a lot of people live in denial. In security-related areas of all kinds where the ROI is largely unobservable loss prevention, that's why leadership-level people know to ask for budget immediately after any incident... because important stuff doesn't get funded or enforced otherwise.
And agreed, I'm not a superfan of Amtrak. There's a wide spectrum on how to do things. The more I learn about any individual one, the more I learn that most things appear broken from the inside, so I am both consistently awed things work in the daily case, and know that left alone, they won't in the edge cases.
> This feels like rapidly shifting goalposts from my statement about energy being local and the local private energy companies cheaping out because they could
It's not shifting the goal posts. A company that feeds into a market with 26 million customers is not so "local" that a free market can't work. That's bigger than most countries. And you've offered no evidence that a public utility would not have "cheaped out" on weatherization.
> Yes, a lot of people live in denial. In security-related areas of all kinds where the ROI is largely unobservable loss prevention, that's why leadership-level people know to ask for budget immediately after any incident... because important stuff doesn't get funded otherwise.
Disaster after disaster happens, and important stuff still doesn't get funded in the public sector. There is a $100 billion shortfall in water system funding: https://www.infrastructurereportcard.org/cat-item/drinking_w.... Did the Flint water crises have any effect on that? No. Because political entities that are accountable to voters for water rate increases aren't any more willing to invest in risk mitigation than private companies.
> And agreed, I'm not a superfan of Amtrak. There's a wide spectrum on how to do things.
Most public infrastructure in the United States is run like Amtrak. The D.C. Metro had to shut down automated train control (self-driving), which was a feature built into the system in the 1970s, because they had let the track sensors deteriorate so much. We had to shut down the subway in D.C. for weeks at a time a couple of years ago because it was literally killing people. New York's subway system is in the same sorry state: https://www.vox.com/policy-and-politics/2017/7/11/15949284/n...
I don't see why solar in Arizona would not help Maine.
If Maine has a shortage, they aren't going to get power directly from Arizona, but couldn't they get power from New Hampshire? If New Hampshire doesn't have any spare capacity, couldn't they still supply Maine and get some from Massachusetts to cover for what they send to Maine? And if Massachusetts doesn't have any spare, can't they similarly go ahead and supply New Hampshire, making it up with power from whoever is next west of them, ultimately ending up with Arizona's extra solar power allowing Maine to get through a shortfall?
Is it only because there's US East and US West? I.e. Maine and New Hampshire can share power generation, and Arizona and New Mexico can share power, we just can't share across the East/West divide, wherever that is?
> The Eastern Interconnection and the Western Interconnection are the largest. Three other regions include the Texas Interconnection, the Quebec Interconnection, and the Alaska Interconnection. Each region delivers power at a nominal 60 Hz frequency. The regions are not usually directly connected or synchronized to each other, but there are some HVDC Interconnectors.
It would seem that an important part of the "market" is missing, namely the ability of consumers to respond to price signals. If every customer could set a maximum price and automatically be cut off when the price goes higher then the load shedding would be automatic, with the available power going to those willing to pay more, presumably because they need it more or can afford it.
That assumes that disconnecting from the grid is a viable option. During this issue, disconnecting from the grid had a substantial chance of causing your pipes to freeze and burst. I wouldn't hold my breath that your insurance will cover that if you turned off your own power.
One of my takeaways is that you really don't want people trying to attempt DIY heating systems. There were ~450 calls for carbon monoxide poisoning, related to people trying to heat their homes with non-electric sources or sources that worked at all. A lot of people tried to run camping stoves indoors. Others ran generators indoors. I believe a girl died because her family tried to stay warm in the car in the garage with the door closed.
> with the available power going to those willing to pay more, presumably because they need it more or can afford it.
I vehemently disagree with this. Wealthy customers should not be able to push the price of electricity high enough that others can't afford to heat their homes. Letting the market figures it out means that those with financial means get to make a choice about what to do, while the poor are universally shoehorned into the worse of the two options.
A significant part of the base load is inelastic demand. People need to heat their homes. People need their refrigerator to work so their food doesn't go bad in a time when you may or may not be able to get groceries. People need to charge their cellphones so they can let their family know that they're okay.
I don't think we really disagree. My point is that the market won't function unless demand can adjust to prices. Right now there is no mechanism to allow it and the market can't possibly work.
If there were, as you say, it still might not work. But there were a lot of pictures of empty buildings with lots of lights on, etc. so there are inefficiencies. And if customers were automatically switching off (or simply reducing their own usage) as prices went up maybe prices would never have gotten so high. Ideally it would sort of be a fine-grained "rolling blackout" where priority is determined by what a customer chooses to purchase given all the variables that only the customer is aware of. That's a functioning market.
I agree that it may be completely impractical to make it work for electricity.
Generators and users of electricity operated on top of that platform. Generation is a competitive market--many entities can be delivering power into the grid, and the product is fungible. Users don't care where the electricity comes from, just about the price. Electricity generation is therefore quite suitable for market mechanisms.
What happened in Texas was not an example of a privatized "platform" failing. The platform (the grid) was fine. Instead, adverse weather events caused a shortage of the product (electricity) running on top of the platform. Put differently, this is not like a scenario where Texas decided to privatize roads and things went sideways. It's like a scenario where packages didn't get delivered on Christmas because COVID caused an unexpected spike in demand for package delivery, as well as an unexpected shortage of drivers for delivery vehicles.