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[quote=Anonymous]One of the big overlooked causes for Texas' emergency is that it is an Energy Only Market vs. a Capacity Market.  The TLDR is that Texas does not pay money to ensure spare capacity exists.

Most states pay pay providers for a certain amount of generating capacity in addition to the amount of energy consumed.  The purpose is to make sure enough spare capacity is available.

Texas is one of two Energy Only markets.  In an energy only market, generators only get paid for the electricity that is consumed.  And guess what, that means generators only build plants when they are confident they can sell that energy - ie lack of spare capacity.

There is an economic incentive to build above the state's normal capacity, and that is the fact that prices can skyrocket during periods of extreme demand.  But those spikes are rare.  And with energy prices so low, generators are unable to bet on getting future revenue from those extreme events.

So Texas' assumption that the free market would provide adequate capacity in extreme situations was wrong, because the market did not forsee an event of this magnitude.  [/quote]

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