Surging Texas Power Prices Promise Both Doom and Riches
By Brian Eckhouse, Naureen S Mali &, Mark Chediak February 16, 2021
Skyrocketing electricity prices in Texas are creating a financial windfall for power generators able to supply energy during the unprecedented cold spell. For companies unable to deliver, losses may be monumental.
Power sold on Texas’s main grid likely totaled $10 billion on Monday based on extraordinarily high prices and demand, according to Wade Schauer, research director of Americas power and renewables at Wood Mackenzie. It may end up being higher after the Public Utility Commission of Texas moved to raise some prices to reflect scarcity.
The most likely winners are going to be generators whose plants can sell power at $9,000 a megawatt-hour, the price cap in Texas.
A 100-megawatt wind farm in Texas that might have normally made almost $40,000 over a two-day period in February could reap more than $9.5 million on Monday and Tuesday alone, said Nicholas Steckler, a power-markets analyst at BloombergNEF.
But for generators whose plants shut down due to frozen instruments, limited natural gas supplies or icing, losses could be substantial. Similarly, retail electricity providers unable to fulfill their commitments will be forced to buy power on the spot market at inflated prices, and sell it at one-tenth of the cost, said Andy DeVries, a power analyst at CreditSights.
Overall, power retailers in Texas are the most vulnerable to the price swings, DeVries said.
“The retailers are screwed,” he said. “I bet you see numerous bankruptcies.”