How offers work

STEP 1

Two decisions, made on two clocks

Whether a unit runs at all and how much it produces are separate decisions, made by different parties at different times.

• On or off (commitment) is decided by the unit's owner, through its QSE (the company that schedules and bids it), hours to days ahead. The QSE reports each hour's planned status in the Current Operating Plan (COP). ERCOT can add units through reliability unit commitment (RUC), but it does not turn units off to save money.
• How much (dispatch) is decided by SCED, ERCOT's real-time market, every five minutes. It only moves units that are already on, and only within each unit's limits: between its minimum output (LSL) and its maximum (HSL), narrowed by how fast it can ramp. Inside that range SCED follows the unit's offer curve, running the cheapest offered MW first until supply meets demand (steps 2 and 3).

SCED never turns a unit on or off. So a negative price on its own does not shut anything down: it only pushes online units down toward their minimum output.

STEP 2

Anatomy of an offer curve

An energy offer curve is a list of price and MW points. Each point says: "once the price reaches this level, I am willing to run at this many MW." ERCOT draws straight lines between the points, so a price between two points maps to an output between them. The curve sets the most SCED will ask of the unit at a given price; SCED can still run it lower than that, for example when its ramp limits or local congestion hold it back.

Two limits matter. HSL (high sustained limit) is the most the unit can produce right now. LSL (low sustained limit) is the least it can produce and stay online: its minimum output. Rio Nogales' LSL is about 475 MW out of 800 MW.

The shaded block from 0 MW to LSL is not a bid. While the unit is on, those MW run at any price; the only way to stop them is to turn the unit off (step 1). Whatever prices the curve shows below LSL never set dispatch or the market price.

Switch to "As ERCOT uses it" to see the curve SCED actually ran on. ERCOT fills the space from 0 MW up to the first offered point with a placeholder price (usually −$20), so in ERCOT's version the LSL block looks like MW offered at −$20. It is minimum output, not an offer to run at −$20.

See the technology totals in the Day view's Offer curves chart →

STEP 3

What SCED can actually move

SCED reads the curve from LSL up. Drag the price: the dot is where SCED would put the unit at that price. It follows the curve above LSL and stops at LSL however low the price goes.

In each five-minute run SCED also respects ramp limits, so the real range is a little narrower than LSL to HSL: LDL and HDL (low and high dispatch limits). The chart below shows the whole day: from HE 10 to HE 17 the price was negative and Rio Nogales sat at its minimum output, because SCED had no lower point to send it to.

Price can only move an online unit between its LSL and HSL. When the price falls, SCED backs each unit down toward LSL until it reaches MW the unit offered at or below that price. So at negative prices, the thermal MW still running above LSL are only those offered at or below the negative price (or held up for a few minutes by ramp limits). Everything else is minimum output that SCED cannot touch.

STEP 4

The stay-on decision

When a stretch of cheap hours is coming, the owner of an online unit chooses between two costs:

• Stay on: run at LSL through the stretch, paying fuel for every MWh and being paid the (negative) price for it.
• Cycle off: shut down and restart for the evening, paying a start cost, accepting a minimum time offline, and risking a failed or late start.

The figures here use the site's Stay-on calculation. Most example units had no three-part offer that day, so their costs are generic and only a rough guide. They say cycling off would have been cheaper, and those units stayed on anyway. Common reasons are start risk and wear, minimum off times, gas already bought, ancillary service awards and the cost of being wrong about the evening ramp.

Quail Run is the counterexample. It is in West Texas, where Waha gas traded at −$3.21/MMBtu that day, so burning gas earned money. It offered its output below −$30, ran above its minimum through the whole stretch, and came out ahead by staying on, even before the restart it avoided.

Trends has the full Stay-on, Shutdowns and "Who turns off for cheap stretches" charts →

ON THIS SITE

What “From LSL” means

Add up every online unit and the minimum output blocks form a large spike at the bottom of the offer stack. In ERCOT's version (step 2) the spike sits at −$20, which makes it look as though many gigawatts are bid at −$20 and are ready to move. They are not.

"From LSL" is how this site draws and counts offers instead. For each technology it takes the online units' total LSL and adds only the MW they offer above LSL at or below each price. The curve runs flat at the LSL total from the left edge, then rises with the real bids. The flat part answers "how much runs regardless of price", and the rise answers "how much moves with price". Switch views to compare.

• Offer curves (Day view): "From LSL" is the default. "As ERCOT prices it" shows the curves SCED saw, with minimum output at the placeholder price.
• Marginal supply and Marginal offer stack (Day view), Marginal supply by settled price and Thermal offer prices (Trends): count only MW above LSL, since only those can be marginal.
• Unit metrics: "≤ $0 as submitted" is a share of the range from LSL to HSL. "First offer price above $0", implied heat rate and the bidding-change signals read the curve from LSL up.
• Charts that keep LSL on purpose: the Floor chart's "≤ −$20, as used", "≤ $0 as used", thermal output in cheap hours and Stay-on. These are about who is running, so minimum output belongs in them.
• 2-day days (the most recent two months) have no unit limits, so they show curves as ERCOT prices them.

Open this hour in the Day view →