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Effect of wind generation on ERCOT nodal prices

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  • Tsai, Chen-Hao
  • Eryilmaz, Derya

Abstract

In this paper, we utilize nodal price data at each thermal-generation facility within the ERCOT footprint between 2014 and 2016 to revisit an empirical question of great interest to various parties: how does wind integration affect the wholesale energy price? We find that for every additional 1000 MW of wind generation in a Real-Time 15-minute Settlement Interval, nodal prices at non-wind resources would be suppressed by $1.45/MWh to $4.45/MWh, with considerable heterogeneity across time and space.

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  • Tsai, Chen-Hao & Eryilmaz, Derya, 2018. "Effect of wind generation on ERCOT nodal prices," Energy Economics, Elsevier, vol. 76(C), pages 21-33.
    • Handle: RePEc:eee:eneeco:v:76:y:2018:i:c:p:21-33
    DOI: 10.1016/j.eneco.2018.09.021
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    1. Zarnikau, J. & Tsai, C.H. & Woo, C.K., 2020. "Determinants of the wholesale prices of energy and ancillary services in the U.S. Midcontinent electricity market," Energy, Elsevier, vol. 195(C).
    2. Olukunle O. Owolabi & Toryn L. J. Schafer & Georgia E. Smits & Sanhita Sengupta & Sean E. Ryan & Lan Wang & David S. Matteson & Mila Getmansky Sherman & Deborah A. Sunter, 2021. "Role of Variable Renewable Energy Penetration on Electricity Price and its Volatility Across Independent System Operators in the United States," Papers 2112.11338, arXiv.org, revised Nov 2022.
    3. Mills, Andrew & Wiser, Ryan & Millstein, Dev & Carvallo, Juan Pablo & Gorman, Will & Seel, Joachim & Jeong, Seongeun, 2021. "The impact of wind, solar, and other factors on the decline in wholesale power prices in the United States," Applied Energy, Elsevier, vol. 283(C).
    4. Lynch, Muireann Á. & Longoria, Genora & Curtis, John, 2021. "Future market design options for electricity markets with high RES-E: lessons from the Irish Single Electricity Market," Papers WP702, Economic and Social Research Institute (ESRI).
    5. Kolb, Sebastian & Dillig, Marius & Plankenbühler, Thomas & Karl, Jürgen, 2020. "The impact of renewables on electricity prices in Germany - An update for the years 2014–2018," Renewable and Sustainable Energy Reviews, Elsevier, vol. 134(C).
    6. Zarnikau, J. & Woo, C.K. & Zhu, S. & Tsai, C.H., 2019. "Market price behavior of wholesale electricity products: Texas," Energy Policy, Elsevier, vol. 125(C), pages 418-428.
    7. Bajo-Buenestado, Raúl, 2021. "Operating reserve demand curve, scarcity pricing and intermittent generation: Lessons from the Texas ERCOT experience," Energy Policy, Elsevier, vol. 149(C).
    8. Doering, Kenji & Sendelbach, Luke & Steinschneider, Scott & Lindsay Anderson, C., 2021. "The effects of wind generation and other market determinants on price spikes," Applied Energy, Elsevier, vol. 300(C).
    9. Sirin, Selahattin Murat & Yilmaz, Berna N., 2020. "Variable renewable energy technologies in the Turkish electricity market: Quantile regression analysis of the merit-order effect," Energy Policy, Elsevier, vol. 144(C).
    10. Zarnikau, J. & Zhu, S. & Woo, C.K. & Tsai, C.H., 2020. "Texas's operating reserve demand curve's generation investment incentive," Energy Policy, Elsevier, vol. 137(C).
    11. Cao, K.H. & Qi, H.S. & Tsai, C.H. & Woo, C.K. & Zarnikau, J., 2021. "Energy trading efficiency in the US Midcontinent electricity markets," Applied Energy, Elsevier, vol. 302(C).
    12. Damien, Paul & Fuentes-García, Ruth & Mena, Ramsés H. & Zarnikau, Jay, 2019. "Impacts of day-ahead versus real-time market prices on wholesale electricity demand in Texas," Energy Economics, Elsevier, vol. 81(C), pages 259-272.
    13. Tsai, Chen-Hao & Figueroa-Acevedo, Armando & Boese, Maire & Li, Yifan & Mohan, Nihal & Okullo, James & Heath, Brandon & Bakke, Jordan, 2020. "Challenges of planning for high renewable futures: Experience in the U.S. midcontinent electricity market," Renewable and Sustainable Energy Reviews, Elsevier, vol. 131(C).
    14. Agostini, Claudio A. & Armijo, Franco A. & Silva, Carlos & Nasirov, Shahriyar, 2021. "The role of frequency regulation remuneration schemes in an energy matrix with high penetration of renewable energy," Renewable Energy, Elsevier, vol. 171(C), pages 1097-1114.
    15. Sirin, Selahattin Murat & Yilmaz, Berna N., 2021. "The impact of variable renewable energy technologies on electricity markets: An analysis of the Turkish balancing market," Energy Policy, Elsevier, vol. 151(C).

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    More about this item

    Keywords

    Renewables; Electricity market; Electricity price;
    All these keywords.

    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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