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Renewable Wednesday: Arbitrage in the US Electrical Grid

Renewable electricity needs the widest possible interconnections. There are two major US interconnections, and one smaller one for Texas. The Tres Amigas SuperStation proposed to intertie all three, but Texas pulled out, and the intertie between the Eastern and Western Interconnects was greatly reduced in size.

Solar power is available at sunrise on the East Coast three hours before it reaches the West Coast, and continues on the West Coast three hours after sunset in the East. Wind power peaks at night, but with similar delays from region to region. Thus power is cheaper in one area than in another, a market failure. Whoever can connect them can balance prices across a much larger market, taking a bit of the difference as profit for itself.

This issue is in the purview of NERC (North American Electric Reliability Corporation).

The vision for the Electric Reliability Organization Enterprise, which is comprised of NERC and the six Regional Entities, is a highly reliable and secure North American bulk power system. Our mission is to assure the effective and efficient reduction of risks to the reliability and security of the grid.

For decades Texas has run its own interconnection, ERCOT, specifically to avoid NERC regulations and standards. It has been willing to export power to Mexico, where NERC is not involved.


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