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Transition and Integration of the ERCOT Market with the Competitive Renewable Energy Zones Project

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  • Xiaodong Du and Ofir D. Rubin

Abstract

In this study, we seek to explore the impact of a state level transmission expansion project, the Competitive Renewable Energy Zones (CREZ), whose goal is to integrate a massive amount of wind energy, on the wholesale market prices in the Electric Reliability Council of Texas (ERCOT). We find strong evidence for price convergence across ERCOT with accordance to the timing of the expansion of major sections of the CREZ. A variety of empirical analyses shows a gradual transition to a well-integrated market. We also find that regional-specific shocks became more important in terms of driving price change in other regions. Specifically, the impacts of Houston (demand) and the West (wind supply) on each other and the North and South regions have increased significantly. Our study contributes to the literature by connecting the expansion of physical transmission lines with electricity market integration.

Suggested Citation

  • Xiaodong Du and Ofir D. Rubin, 2018. "Transition and Integration of the ERCOT Market with the Competitive Renewable Energy Zones Project," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4).
    • Handle: RePEc:aen:journl:ej39-4-rubin
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    Cited by:

    1. Simshauser, P. & Newbery, D., 2023. "Non-Firm vs. Priority Access: on the Long Run Average and Marginal Cost of Renewables in Australia," Cambridge Working Papers in Economics 2363, Faculty of Economics, University of Cambridge.
    2. Heesun Jang, 2020. "Market Impacts of a Transmission Investment: Evidence from the ERCOT Competitive Renewable Energy Zones Project," Energies, MDPI, vol. 13(12), pages 1-16, June.
    3. McDonald, Paul, 2023. "Locational and market value of Renewable Energy Zones in Queensland," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 198-213.
    4. Cao, K.H. & Qi, H.S. & Tsai, C.H. & Woo, C.K. & Zarnikau, J., 2021. "Energy trading efficiency in the US Midcontinent electricity markets," Applied Energy, Elsevier, vol. 302(C).

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    JEL classification:

    • F0 - International Economics - - General

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