How Wind Power is Affecting Electricity Prices in Texas

Texas is the leading wind power state in the nation. It reached 15,764 MW of installed capacity in 2015 and doubled its wind capacity since 2009. One MW powers approximately 200 homes in Texas in the summer months but close to 800 homes in the winter months. To put that into perspective, that’s more than double the energy generated by the state with the second-highest wind generation, Iowa.

The growth in wind output has changed the way the Energy Reliability Council of Texas (ERCOT) dispatches gas-fired generation units and can impact off-peak pricing, hour ending 10 p.m. to 6 a.m.  In fact, at night, there have been periods with so much wind power, that one major hub was trading below $0.00/MWh for fifty hours in November of 2015!  This happened again in March, 2016.

Wind Generation by State

When electricity starts selling for nothing, this could result in supply problems if traditional generators cannot sell their power at a profit. With climate change, can anyone guarantee that the steady winds needed for wind generation can be counted on?

Why isn’t the per MWh cost of wind generation impacted in the same way conventional generation is? Prices can go negative because during off-peak hours, the amount of available generation can exceed the demand at that point in time (measured in 15 minute intervals). Unless wind speeds are high enough to require operators to lock the wind blades, output will not be curtailed and traditional generation can be asked to go to minimum generation levels or shut down.