Solar to Oil: Resistance is Futile

April 15, 2014

ercot

Above – ERCOT (Electric Reliability Council of Texas provides this map of Locational Marginal Pricing of electricity (MWH) across its service area.

Note prices of electricity are color coded.  Now note the bright red/orange blob across the west Texas Oil patch.

The far west of Texas is ground zero for the extraction of exotic fossil fuels like fracked natural gas and Shale oil. It is also prime territory for solar energy — hot, flat, and clear.  Much of that solar has remained unexploited due to transmission bottlenecks that make it difficult to transmit power to the more populous eastern Texas cities.

But the explosion of gas and shale fields in West Texas means, there is a huge demand for electricity – and “solar wildcatters” are springing up to meet that demand.  Traditional Texas wildcatters drill for oil,  with the knowledge that most holes will be dry.

Solar wildcatters know that every panel they set up will be catching the suns rays – their only uncertainty is price.
In the existing situation –  high demand from fossil fuelers jacks up those prices, feeding a blossoming solar industry, ramping up more mass production of solar panels, dropping those prices, – making solar only more inevitable by the moment, and hastening the imminent assimilation of the energy industry.

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16 Responses to “Solar to Oil: Resistance is Futile”

  1. rayduray Says:

    Peter,

    I went here:

    http://www.ercot.com/content/cdr/contours/rtmLmpHg.html

    The map is completely different. It shows what I take to be a congestion issue in the Houston area. But that West Texas price phenomena completely disappears. So much for the reliability of the Reliability Council, eh? 🙂

  2. jimbills Says:

    This illustrates one of my fears about a renewable transition – that it will facilitate fossil fuel extraction, not eliminate it.

    Higher energy prices raise costs on already marginally profitable fossil fuel sources. Lowering those costs, by whatever means, increases the profitability of those sources and therefore makes it much more likely they will be extracted and burned.

    The only possible way a free market system can keep fossil fuels in the ground is if they become so expensive, either on their own or comparatively, that it’s not worth extracting them. Unfortunately, all energy sources have a sort of symbiotic relationship. Each source’s price influences the price of the other in a secondhand manner. A huge price gap between fossil fuels and renewables isn’t likely to take place any time soon, which means that probably both will be developed for the foreseeable future.

    I keep saying it, but the only way I see that we can really halt fossil fuels is to either mandate that they stay in the ground, artificially raise the prices on FF to increase the price gap, and/or eliminate subsidies to FF and raise subsidies to renewables (also increasing the gap). All require governmental action, and iffy proposition, but it’s a far more effective means than twiddling our thumbs and hoping the free market solves it (and it has such a great track record so far).

  3. cyhalothrin Says:

    Peter, I’m confused by what point you’re trying to make. It could be that I don’t understand the map correctly, but it would appear that the price of electricity is higher in west Texas than in the central and eastern part of the state.

    So are you saying that solar drives up the price of electricity? I would have expected solar to be driving down the price if the technology is working as advertised.

    But maybe that big orange pathway over west Texas has nothing to do with solar. When I change the time on the map to noon, the price of electricity escalates in the Houston area, creating one small orange blip on the map over the city:

    http://www.ercot.com/content/cdr/contours/damSpp12Hg.html

    Is that because Houston is a hotbed of solar PV? Seems strange – I would have expected Austin (a hotbed of environmentalism in otherwise conservative Texas) to be the solar capital. The Dallas area – which is even sunnier – should likewise be showing some yellow and orange.

    I assume that the price of electricity depends on supply and demand. I would need more information to understand just why Houston and west Texas have higher-than-average prices. Those two places don’t seem to have much in common geographically – Houston is humid and crowded, while west Texas is dry desert and sparsely inhabited. If you’ve got more info to explain the discrepancy in prices across the state, I’d be interested in hearing it.

    cheers,
    Cy

    • rayduray Says:

      Cy,

      I saw that same map of the Houston anomaly. At first I thought it might have something to do with a congestion charge. Then I reversed course and thought it might have to do with a power plant going down which might have provided a dramatic demand spike on the grid. Enron used to play games like this when they were gaming California.

      I see that later in the day the Houston transient price has vanished.

      I think all of this is nonsense. If we had a public utility system nationwide, we would not have all this techy market price zombification. I don’t know of there was any price gouging and fraud involved in today’s market action on the ERCOT grid, but there certainly was trader fraud involved in the machinations of CAISO back before Enron blew itself up.

      ***
      Further, I might suggest that the map image Peter provided is quite misleading. It works with his story about solar and o&g development in West Texas. But the image is just a transient and not really descriptive of the real dynamic market.

    • greenman3610 Says:

      what is happening is that the rush for tracking and exotic fossil fuels is driving up the cost of electricity in west Texas. Since the grid in that area is somewhat bottlenecked, the quickest-to-deploy electricity solution is solar.
      Hence, big oil is paying big money to, in essence, accelerate development of solar, further ramp up the solar supply chain, and drive down solar prices.

      The dynamics of this were pointed out to me by someone deeply committed to renewable development, and extremely knowledgeable about the Texas grid.


  4. […] 2014/04/15: PSinclair: Solar to Oil: Resistance is Futile […]


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