While anomalies can happen in the wholesale market – think back to the huge price spike with Griddy over the summer – the retail world is usually much more stable. This isn’t necessarily true for the town of Georgetown, Texas though, who is currently seeing higher retail electricity costs as a result of switching to all renewables.
Georgetown is an example of a city generating far more power than needed and having to take financial losses despite having surplus power – an odd but common happening in the power world for those wanting to get rid of excess electricity.
The residents of Georgetown saw their bill raised by 22% from last year. This has more to do with lower gas prices mixed with excess energy that the town takes financial losses for. While a unique case of a 100% renewable town, will the volatility of renewables bleed into retail electricity bills and make them much more erratic? Sort of like Griddy’s wholesale model?
That’s hard to say at this point. Many are still really optimistic about renewables offering a much more promising future, but at this stage, the current paradigm doesn’t yet support a 100% renewable initiative. Checking in with Georgetown will be interesting in a year or two to see how electricity prices have faired.
Machine Learning for Cheaper Electricity Rates?
For renewable customers, some companies are using machine learning to scour utilities for the cheapest renewable electricity. Given the oft-discussed volatility of wholesale electricity prices, especially those that base their prices on something as erratic as wind levels and sunshine (wind and solar), machine learning offers automation and a way to break through the noise of the market to find the proverbial signal.
What this means is that consumers get the cheapest prices in real-time and get advisories on the wholesale market that directly factors into retail pricing. There are even technological developments that allow smart thermostats to adjust to price spikes ahead of time, meaning that households can cool down or heat up quickly before a costly spike in the wholesale market affects the bill. This would offer incredibly cheap prices if there was dynamic adjustment through connected technologies.
Wholesale and Retail Worlds Collide
The Baker Institute put out a study on the economic impact of the Texas reform in 2002, where the electricity market was deregulated. Through that study they found that the stronger competition of deregulated markets still has discernible effects on wholesale market prices. They also found that although the competitive electricity markets (deregulated areas of Texas) cost higher on average from 2002 and upwards, but that the disparity between deregulated and regulated prices has shrunk considerably in that time.