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Transition and Integration of the ERCOT Market with the Competitive Renewable Energy Zones Project

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  • Xiaodong Du
  • Ofir D. Rubin

Abstract

In this study, we seek to explore the impact of a state level transmission expansion project, the Competitive Renewable Energy Zones (CREZ), whose goal is to integrate a massive amount of wind energy, on the wholesale market prices in the Electric Reliability Council of Texas (ERCOT). We find strong evidence for price convergence across ERCOT with accordance to the timing of the expansion of major sections of the CREZ. A variety of empirical analyses shows a gradual transition to a well-integrated market. We also find that regional-specific shocks became more important in terms of driving price change in other regions. Specifically, the impacts of Houston (demand) and the West (wind supply) on each other and the North and South regions have increased significantly. Our study contributes to the literature by connecting the expansion of physical transmission lines with electricity market integration

Suggested Citation

  • Xiaodong Du & Ofir D. Rubin, 2018. "Transition and Integration of the ERCOT Market with the Competitive Renewable Energy Zones Project," The Energy Journal, , vol. 39(4), pages 235-260, July.
    • Handle: RePEc:sae:enejou:v:39:y:2018:i:4:p:235-260
    DOI: 10.5547/01956574.39.4.oru
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    References listed on IDEAS

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    Cited by:

    1. Simshauser, P. & Shellshear, E., 2026. "Renewable Energy Zones: Generator Cost Allocation Under Uncertainty," Cambridge Working Papers in Economics 2524, Faculty of Economics, University of Cambridge.
    2. Simshauser, Paul & Newbery, David, 2024. "Non-firm vs priority access: On the long run average and marginal costs of renewables in Australia," Energy Economics, Elsevier, vol. 136(C).
    3. Simshauser, Paul, 2025. "Competition vs. coordination: Optimising wind, solar and batteries in renewable energy zones," Energy Economics, Elsevier, vol. 143(C).
    4. Kassel, Drew A. & Rhodes, Joshua D. & Webber, Michael E., 2025. "A method to analyze the costs and emissions tradeoffs of connecting ERCOT to WECC," Applied Energy, Elsevier, vol. 378(PA).
    5. Paul Simshauser & Evan Shellshear, 2025. "Renewable Energy Zones: generator cost allocation under uncertainty [Revised version]," Working Papers EPRG2506, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    6. Simshauser, Paul & Gohdes, Nicholas, 2025. "Incomplete markets, pumped hydro storage and the role of policy in Australia's national electricity market," Energy Policy, Elsevier, vol. 204(C).

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