Graeme Cooper

As the price of natural gas spikes across Europe for the fourth time in the last five years remember those extremely clever people in Reform and the Conservatives who want to abandon renewable energy and rely even more on gas 🤡 🤡

Oil price is spiking this morning. Three major implications: 1) Makes life less affordable here. Bad news for democracy. 2) Russia will get more revenue from oil sales 3) Time for us to get off these fossil fuels

When your test car has to be trucked to Wales… we’ve got a problem. Podcast episode: 301

I used to think about the transmission process alot. But it has been some time since I gathered my thoughts on transmission. Anyways after some discussions on X today I decided to post a summary of my philosophy on current state of ERCOT transmission. If anything Im sure iI will need this post to refer to in the future. Hopefully this post also helps explain why I favor a cost-causality/beneficiaries-pay approach for ERCOT. My choice here is not about “fairness” its about doing things the right way, prioritizing market signals, and incentivizing market-based behaviors as much as possible in a market that is facing unsustainable transmission costs: Connect-and-manage is about short-run operations, beneficiaries-pay is about long-run investment discipline. Connect-and-manage does not discipline planning decisions when transmission costs are socialized. For example developers can rationally site in remote locations, capture upside from good resources and expect that if congestion (or curtailments) become severe (or worsen) transmission will eventually be built and paid for by everyone else! Developers essentially are receiving a free put option on congestion & deliverability! That is classic “privatize the upside, socialize the downsize”. Presence of the free put option above therefore weakens LMPs as long-run signals and biases the system toward overbuilding wires. LMPs price short-run scarcity and congestion but they cannot force investors to internalize the long-lived lumpy cost of future transmission if those costs are externalized. Beneficiaries-pay and cost-causality approaches restore that missing signal by making those who benefit from transmission face its cost ex-ante therefore forcing explicit comparison with wires-substitutes such as storage, hybrids, better siting, demand flexibility. Note that beneficiaries-pay approach will also materially impact load siting, load operations and load investment decisions so this approach is better for load too. In short: connect-and-manage ensures generators can operate despite congestion but it does not force them to internalize the long-run cost of relieving that congestion; beneficiaries-pay does. Also a beneficiaries-pay approach is not only compatible with connect-and-manage but also very complementary! If I find time one day I’ll create another post on the reasons why incentives and alignments for wires-alternatives matter so much even if the outcome results in higher energy prices all else being equal!