Abstract
Texas is the largest electricity-consuming state in the United States and leads the nation in variable renewable energy (VRE) development. It projects a huge increase in solar plant construction, despite VRE development’s “cannibalization effect” on the investment incentive for solar generation and the rising popularity of short-term VRE power purchase agreements in the United States. Our empirical investigation of short-term spot and forward solar energy sales first uses Texas’s monthly wholesale electricity market data for February 2016 to December 2021 to forecast the average daytime (07:00–19:00) spot energy prices and their standard deviations for forward-looking periods of one year, three years, five years and ten years. It then applies the price forecast results to analyze the revenue forecasts for a solar generation developer’s spot and forward energy sales, revealing that a new solar plant’s revenue forecast level (respectively, volatility) increases (respectively, decreases) with a short-term solar power purchase agreement’s forward energy price. When the forward energy price is below (respectively, above) the spot energy price forecast, the developer’s short-term power purchase agreement offer in response to a loadserving entity’s VRE procurement auction announcement is for a megawatt-fraction (respectively, 100%) of the plant’s energy output.
Original language | English |
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Pages (from-to) | 1-39 |
Number of pages | 39 |
Journal | Journal of Energy Markets |
Volume | 17 |
Issue number | 1 |
DOIs | |
Publication status | Published - 1 Mar 2024 |
Scopus Subject Areas
- Economics and Econometrics
- General Energy
- Strategy and Management
User-Defined Keywords
- forward solar energy sale
- revenue analysis
- short-term power purchase agreements (PPAs)
- solar generation development
- spot solar energy sale
- Texas