That’s the value of economic loss occurring in the ERCOT region of Texas right now, based on the load sector weighted average of the Value of Lost Load (VOLL), the result of a study commissioned to London Economics by ERCOT in 2013. The weighted average VOLL is $22,243 per megawatt hour (MWh) in ERCOT. Over the past three days about 20,000 MWs of electricity hasn’t been delivered per hour that otherwise would be delivered if not for the effects of the polar vortex. You can do the math on the rolling economic impact.
$180 million per hour is the economic impact to power producers not operating to deliver that 20,000 MWs of power per hour if you apply the ERCOT locational marginal price (LMP) cap of $9,000/MWh. And for many of the 127 retail electricity providers (REPs) in ERCOT who sell a fixed price electricity product to consumers, and who don’t hedge their supply, they are likely facing bankruptcy.
For consumers who have been consuming electricity during the past few days, and who have been buying electricity at the LMP, their power bill for three days will likely exceed their entire annual budget for electricity spend. Griddy, in an act of transparency, proactively communicated this situation to their customers. When the dust settles, these central US power outages will likely prove to be the most costly power outages in human history, measured in dozens of lives lost and tens of billions of dollars, far exceeding the effects from the 2003 blackout that hit the Northeast US.
While the pundits and sideline snipers are eager to blame and point fingers, rest assured that ERCOT, or any wholesale power market operator (SPP and MISO currently) in a similar situation, is doing their level best to balance the needs of consumers, regulators, suppliers, and politicians, all of whom establish the electricity markets upon which our livelihoods depend more and more. Now is the time to offer solutions to help electricity market operators deal with the cataclysmic challenges of climate change, the effects of which will accelerate and produce more frequent, similar situations. We can no longer “wait and see.”
The good news is that power market operators have an incredibly powerful tool at their disposal to ensure power quality, resilience, and affordability right now . . . distributed energy resources. 200,000 MWs of these resources lie in wait in the US alone. Much like the mainframes and “dumb terminals” of the 1970s, our current power grid is characterized largely by central power stations and “dumb loads.” The internet now offers a single standard upon which every digital device can choose to connect, creating a platform for massive innovation and unlocking the value of networks. Voltus dreams of a single electricity transmission superhighway, a single wholesale power market, and an interconnected system of distributed energy technologies operating in conjunction with central power stations, grid operators, and local utilities who have the systems they need to ensure that our modern, digital economy has uninterrupted, affordable, clean, and resilient power.
Today, our distributed energy resources are operating at full tilt to help ERCOT, SPP, and MISO. Our Texas teammates are on the front lines, bringing value to our customers, and operating the virtual power plants that these market operators are making use of right now. Our team and technology is built to unleash the massive benefits of distributed energy resources in every market in the world.
CEO & Co-founder