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Opinion
Liam Denning

The Texas Power Casino Pays Off (for Now)

Spiking prices are a feature of the state’s electricity market, but solar power could change that.

Merchant generators go on a heater that won't last forever.

Merchant generators go on a heater that won't last forever.

Photographer: Eddie Seal/Bloomberg

There’s a Vegas-like quality to the Texas electricity market. Whereas other regions use factors like capacity payments to encourage new power plants, Texas relies on the spin of the wheel. If temperatures are hot enough, and the wind is calm enough, and enough power generators go offline unexpectedly, a scramble for power spurs prices from the usual range of $20 to $30 per megawatt-hour up to $9,000.

And that’s what happened last week: