The impact of wind generation on wholesale electricity prices in the hydro-rich Pacific Northwest

Chi Keung WOO, Jay ZARNIKAU, Jonathan KADISH, Ira HOROWITZ, Jianhui WANG, Arne OLSON

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39 Citations (Scopus)

Abstract

Extant literature documents that wind generation can reduce wholesale electricity market prices by displacing conventional generation. But how large is the wholesale price effect of wind generation in an electricity market dominated by hydroelectric generation? We explore this question by analyzing the impact of wind generation on wholesale electricity prices in the Pacific Northwest region of the United States. This hydro-rich system tends to be energy-limited, rather than capacity-constrained, with its marginal generation during the hydro runoff season often a hydro unit, instead of a natural-gas-fired unit. We find that increased wind generation reduces wholesale market prices by a small, but statistically-significant, amount. While a hydro-rich system can integrate wind generation at a lower cost than a thermal-dominated region, the direct economic benefits to end-users from greater investment in wind power may be negligible. Copyright © 2013 IEEE.

Original languageEnglish
Pages (from-to)4245-4253
JournalIEEE Transactions on Power Systems
Volume28
Issue number4
Early online dateJun 2013
DOIs
Publication statusPublished - Nov 2013

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Electricity
Runoff
Wind power
Natural gas
Economics
Costs
Power markets

Bibliographical note

Woo, C.-K., Zarnikau, J., Kadish, J., Horowitz, I., Wang, J., & Olson, A. (2013). The impact of wind generation on wholesale electricity prices in the hydro-rich Pacific Northwest. IEEE Transactions on Power Systems, 28(4), 4245-4253. doi: 10.1109/TPWRS.2013.2265238

Keywords

  • Electricity markets
  • Electricity prices
  • Power-system economics
  • Regression analysis
  • Sustainable development
  • Wind energy