The impact of wind generation on the electricity spot-market price level and variance: The Texas experience

Chi-Keung WOO; I. Horowitz; J. Moore; A. Pacheco

doi:10.1016/j.enpol.2011.03.084

The impact of wind generation on the electricity spot-market price level and variance: The Texas experience

Chi-Keung WOO, I. Horowitz, J. Moore^*, A. Pacheco

^*Corresponding author for this work

Research output: Contribution to journal › Journal article › peer-review

268 Citations (Scopus)

Abstract

The literature on renewable energy suggests that an increase in intermittent wind generation would reduce the spot electricity market price by displacing high fuel-cost marginal generation. Taking advantage of a large file of Texas-based 15-min data, we show that while rising wind generation does indeed tend to reduce the level of spot prices, it is also likely to enlarge the spot-price variance. The key policy implication is that increasing use of price risk management should accompany expanded deployment of wind generation.

Original language	English
Pages (from-to)	3939-3944
Number of pages	6
Journal	Energy Policy
Volume	39
Issue number	7
DOIs	https://doi.org/10.1016/j.enpol.2011.03.084
Publication status	Published - Jul 2011

Scopus Subject Areas

Energy(all)
Management, Monitoring, Policy and Law

User-Defined Keywords

Electricity price
Risk management
Wind energy

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

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10.1016/j.enpol.2011.03.084

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abstract = "The literature on renewable energy suggests that an increase in intermittent wind generation would reduce the spot electricity market price by displacing high fuel-cost marginal generation. Taking advantage of a large file of Texas-based 15-min data, we show that while rising wind generation does indeed tend to reduce the level of spot prices, it is also likely to enlarge the spot-price variance. The key policy implication is that increasing use of price risk management should accompany expanded deployment of wind generation.",

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AU - Pacheco, A.

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Y1 - 2011/7

N2 - The literature on renewable energy suggests that an increase in intermittent wind generation would reduce the spot electricity market price by displacing high fuel-cost marginal generation. Taking advantage of a large file of Texas-based 15-min data, we show that while rising wind generation does indeed tend to reduce the level of spot prices, it is also likely to enlarge the spot-price variance. The key policy implication is that increasing use of price risk management should accompany expanded deployment of wind generation.

AB - The literature on renewable energy suggests that an increase in intermittent wind generation would reduce the spot electricity market price by displacing high fuel-cost marginal generation. Taking advantage of a large file of Texas-based 15-min data, we show that while rising wind generation does indeed tend to reduce the level of spot prices, it is also likely to enlarge the spot-price variance. The key policy implication is that increasing use of price risk management should accompany expanded deployment of wind generation.

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KW - Risk management

KW - Wind energy

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The impact of wind generation on the electricity spot-market price level and variance: The Texas experience

Abstract

Scopus Subject Areas

User-Defined Keywords

UN SDGs

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