# Today in Energy June 24, 2014 

# Fewer wind curtailments and negative power prices s een in Texas after major grid expansion

Source: U.S. Energy Information Administration, based on th e Electric Reliability Council of Texas (ERCOT) for curtailments and SNL Energyfor electricity prices Curtailments of wind generation on the Texas electr ic grid have steadily dropped since 2011 as more th an 3,500 miles of transmission lines have been built, largely as a result of the s tate's Competitive Renewable Energy Zones (CREZ) program. Occurrences of wind-related negative real-time electricity prices have similarly declined as the CREZ transmission expansions have allowed wind power to flow to more electricity demand areas in the sta te. Wind capacity in Texas grew rapidly in 2006-09, whe n more than 7,000 megawatts (MW) of utility-scale w ind capacity (more than half of the state's current total wind capacity ) was built. The Texas grid experienced major trans mission congestion as the large volumes of electricity from these wind plants, which were conc entrated in the rural western and northern areas ofthe state, were sometimes unable to reach the population centers in the eastern halfof the state. The limited transmission capacity co nnecting the wind production and power demand centers was insufficient for the amoun t of wind power being generated in the west. During these situations, excess wind generation was curtailed by the grid's operator, th e Electric Reliability Council of Texas(ERCOT), in order to keep the transmission network operating within its physical limits. In addition to wind curtailments, the regional supp ly and demand imbalances caused real-time wholesale electricity prices at the West Hub in ERCOT to drop, and even go negative, during periods of substantial wind generation. The negativ e West Hub prices (see graph above) reflect the region's local oversupply of win d power compared to its electric demand and the ina bility to move the excess wind power to other areas with more demand. Negative prices occur when generators are willing to pay for the o pportunity to continue generating electricity. Wind plants can offer power at low prices because t hey have low operating costs and, in particular, no fuel costs, unlike fossil fuel and biomass plants. Wind plants can offer negative pric es because of the revenue stream that results from the federal production tax credit , which generates tax benefits whenever the wind plan t is producing electricity, and payments from state renewable portfolioor financial incentive programs. These alternative revenue streams make i t possible for wind generators to offer their wind power into the wholesale electricity market at prices lower than other gener ators, and even at negative prices. 

### Fewer wind curtailments and negative power prices s een in Texas after m... http://www.eia.gov/todayinenergy/detail.cfm?id=1683 1

1 of 4 1/22/2015 4:01 PMTo address the wind-related transmission constraint s, the Public Utility Commission of Texas (PUCT) in 2008 established five

"competitive renewable energy zones" (CREZ) with hi gh wind power potential and authorized a series of transmission expansion projects that in total would allow 18,500 MW of win d power to be transported from the five CREZ zones to the rest of the state. As the CREZ transmission projects have been complet ed over the past few years (see maps below), the am ounts of wind curtailments and wind-related negative electricity prices have c orrespondingly decreased (as seen in the first grap h). As of the end of 2013, the scheduled program completion date, all of the CREZ projects had been energized, at a total cost of $7 billion.



### Source: Public Utility Commission of Texas, April 2014 Competitive Renewable Energy Zones (CREZ) Program Progress Reports Note: Click to enlarge. Fewer wind curtailments and negative power prices s een in Texas after m... http://www.eia.gov/todayinenergy/detail.cfm?id=1683 1

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### Source: Public Utility Commission of Texas, April 2013 Competitive Renewable Energy Zones (CREZ)

Program Progress Reports Note: Click to enlarge. Fewer wind curtailments and negative power prices s een in Texas after m... http://www.eia.gov/todayinenergy/detail.cfm?id=1683 1

3 of 4 1/22/2015 4:01 PMThe elimination of transmission constraints has hel ped wind generation in Texas reach new heights overthe past year. As reported in

yesterday's article , ERCOT recently recorded a new peak record for win d output in March 2014 of over 10,000 MW. And accor ding to ERCOT's annual report on the Texas renewable energy credit trading program , wind generation in the state was up 13% in 2013 compared to 2012. The growth is mostly attributable to the large number of wind plants added at the ve ry end of 2012 ( more than 1,000 MW was added in December 2012 ), but also partly a result of the reduction in win d curtailments. Principal contributor: April Lee 

### Source: Public Utility Commission of Texas, October 2012 Co mpetitive Renewable Energy Zones (CREZ) Program Progress Reports Note: Click to enlarge. Fewer wind curtailments and negative power prices s een in Texas after m... http://www.eia.gov/todayinenergy/detail.cfm?id=1683 1

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