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Wind generation and zonal-market price divergence: Evidence from Texas

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Author Info

  • Woo, C.K.
  • Zarnikau, J.
  • Moore, J.
  • Horowitz, I.

Abstract

The extant literature on wind generation and wholesale electricity spot prices says little about how wind generation may affect any price differences between two inter-connected sub-markets. Using extensive data from the four ERCOT zones of Texas, this paper develops a two-stage model to attack the issue. The first stage is an ordered-logit regression to identify and quantify, for example, the impact of wind generation in the West zone on the estimated probability of a positive or negative price difference between the North and West zones. The second stage is a log-linear regression model that identifies and quantifies the estimated impact of wind generation on the sizes of those positive and negative price differences. It is shown that high wind generation and low load in the wind-rich ERCOT West zone tend to lead to congestion and zonal price differences, that those differences are time-dependent, and that other factors such as movements in nuclear generation and natural-gas prices, as well as fluctuating non-West zone loads, also play a role. The results have broad implications for energy policy makers that extend well beyond the borders of Texas and, indeed, those of the United States.

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Bibliographic Info

Article provided by Elsevier in its journal Energy Policy.

Volume (Year): 39 (2011)
Issue (Month): 7 (July)
Pages: 3928-3938

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Handle: RePEc:eee:enepol:v:39:y:2011:i:7:p:3928-3938

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Web page: http://www.elsevier.com/locate/enpol

Related research

Keywords: Wind energy Zonal-market price difference ERCOT;

References

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Cited by:
  1. Amor, Mourad Ben & Billette de Villemeur, Etienne & Pellat, Marie & Pineau, Pierre-Olivier, 2014. "Influence of wind power on hourly electricity prices and GHG emissions: Evidence that congestion matters from Ontario zonal data," MPRA Paper 53630, University Library of Munich, Germany.
  2. Chi-Keung Woo, Ira Horowitz, Brian Horii, Ren Orans, and Jay Zarnikau, 2012. "Blowing in the Wind: Vanishing Payoffs of a Tolling Agreement for Natural-gas-fired Generation of Electricity in Texas," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1).
  3. Woo, C.K. & Li, R. & Shiu, A. & Horowitz, I., 2013. "Residential winter kWh responsiveness under optional time-varying pricing in British Columbia," Applied Energy, Elsevier, vol. 108(C), pages 288-297.
  4. Nogueira, Carlos Eduardo Camargo & Vidotto, Magno Luiz & Niedzialkoski, Rosana Krauss & de Souza, Samuel Nelson Melegari & Chaves, Luiz Inácio & Edwiges, Thiago & Santos, Darlisson Bentes dos & Wernc, 2014. "Sizing and simulation of a photovoltaic-wind energy system using batteries, applied for a small rural property located in the south of Brazil," Renewable and Sustainable Energy Reviews, Elsevier, vol. 29(C), pages 151-157.

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