Incremental wind energy development in the Midcontinent Independent System Operator electricity markets of the United States

Han S. Qi*, Kang Hua Cao, Chi Keung Woo, Raymond Li

*Corresponding author for this work

Research output: Contribution to journalJournal articlepeer-review


In this paper we project how much incremental wind energy development may occur without causing inadequate investment incentives (also known as missing money) for wind generation and natural-gas-fired generation in the day-ahead market and real-time market of the Midcontinent Independent System Operator (MISO) in the United States. Using a large sample of hourly data for the 82-month period of Jan-uary 1, 2014 to October 31, 2020, we document that the day-ahead market’s hourly investment incentives move with the day-ahead forecast of daily natural gas prices; MISO’s day-ahead hourly requirements of ancillary services; MISO’s zonal day-ahead hourly schedules of nuclear generation, wind generation and must-run gen-eration; and MISO’s zonal day-ahead forecasts of hourly loads. Findings based on the real-time market’s hourly data tell a similar story. Further, the negative effect of incremental wind energy development on investment incentives over the forward-looking period of 2023–42 is offset by the positive effect of a rising natural gas price, nuclear plant retirement, declining must-run generation and growing demand. In the extreme case of nuclear plant retirement and zero must-run generation, incremental wind energy development of up to around 441% of the existing level of wind generation may occur as a market-based outcome without missing money in MISO’s day-ahead market.

Original languageEnglish
Pages (from-to)29-53
Number of pages25
JournalJournal of Energy Markets
Issue number2
Publication statusE-pub ahead of print - Oct 2023

Scopus Subject Areas

  • Economics and Econometrics
  • Energy(all)
  • Strategy and Management

User-Defined Keywords

  • generation investment incentives
  • Midcontinent Independent System Operator (MISO)
  • missing money
  • United States
  • wind energy development (WED)


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