The debate over capacity markets and whether or not they will become a model for Texas electricity continues to rage. I’ve already given you my thoughts on a Capacity market in my primer on the subject. But more information from all sides continues to blast out from all interested parties. First was the release of an NRG study that admitted that a capacity market would cost Texans an additional 4.7 billion dollars per year. Of course, NRG who would love a capacity market, indicated much of that money would be recouped. Fortunately, Paul Ring of Energy Choice Matters quickly debunked that notion in his article last week.
Of course, the biggest claim of the power generators is that they simply aren’t making enough money to warrant investment as long as natural gas prices continue to remain low. And this is despite raising the market cap last year (with more raises in the pipeline) precisely to encourage investment in new generation plants.
Of course, despite claiming not enough profits, large generation companies sure seem eager to PLAN new plants, according to this article in Rueters
Power companies in fast-growing Texas are drawing plans for 20 new generation plants, even though most projects cannot be financed because of a standoff between state regulators over how to reform the state’s $29 billion electricity market.
Of course, to me, “cannot be financed” reads more like “waiting to see if they can squeeze more money out of taxpayers.” But I might be cynical. What I really did enjoy was later in the article, this little snippet:
Panda Power Funds of Dallas, considered a maverick among developers, overcame significant financing hurdles this year to begin construction of two natural gas-fired plants totaling 2,200 MW.
In the world on power generation, Panda Power is a small guy. And yet this little guy managed to find financing to build two new plants in Texas despite the current “stalemate.” One would think mega companies such as NRG or Just Energy wouldn’t have any difficulty securing financing for new plants. In fact, they wouldn’t. They just want more profits. It’s funny how Panda is “considered a maverick” when the only thing they’re doing is creating supply where there is need for demand.
Anyway, the debate over a capacity market will continue to rage. Hopefully Rick Perry’s newest appointment to the PUC, former Chief of Staff Brandy Marty, will bring common sense to the discussion and eventually get capacity markets tossed out. Fingers crossed.