University of Natural Resources and Life Sciences, Vienna (BOKU) - Research portal

Logo BOKU Resarch Portal

Selected Publication:

Gruber, K; Gauster, T; Laaha, G; Regner, P; Schmidt, J.
(2022): Profitability and investment risk of Texan power system winterization
NAT ENERGY. 2022; 7(5): 409-416. FullText FullText_BOKU

A lack of winterization of power system infrastructure resulted in substantial rolling blackouts in Texas in 2021, but debate about the cost of winterization continues. Here we assess if incentives for winterization on the energy-only market are sufficient. We combine power demand estimates with estimates of power plant outages to derive power deficits and scarcity prices. Expected profits from winterization of a large share of existing capacity are positive. However, investment risk is high due to the low frequency of freeze events, potentially explaining the under-investment, as do the high discount rates and uncertainty about power generation failure under cold temperatures. As the social cost of power deficits is one to two orders of magnitude higher than the winterization cost, regulatory enforcement of winterization is welfare enhancing. Current legislation can be improved by emphasizing the winterization of gas power plants and infrastructure. There has been continued debate on the cost and benefits of winterization of energy infrastructure in Texas, especially after 2021 power outages. Here the authors estimate the expected revenues from winterization, and its cost, and find that winterization would pay off taking into account the probability of similar outages.
Authors BOKU Wien:
Gauster Tobias
Gruber Katharina
Laaha Gregor
Regner Peter
Schmidt Johannes
BOKU Gendermonitor:

© BOKU Wien Imprint