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The impact of wind generation on wholesale electricity market prices in the midcontinent independent system operator energy market: An empirical investigation

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  • Quint, Dov
  • Dahlke, Steve

Abstract

The Midcontinent Independent System Operator (MISO) is the second largest organized competitive wholesale electricity market in the U.S. Wholesale electricity prices in MISO have decreased over the past several years, as both natural gas prices have fallen, and large amounts of wind generation capacity have been added. Using an empirical econometric approach studying historical hourly real-time electricity prices, load, natural gas prices, and other MISO market data, a series of econometric models are estimated using historical data from 2008 to 2016, to identify the impact of increased wind generation on wholesale electricity prices in MISO. This is the first such empiric study for MISO, the largest wholesale electricity market by geography in the world. Furthermore, this is the first empiric study estimating impacts of wind generation on electricity price that utilizes a comprehensive set of predictor variables to control for many sources of potential bias. The results show a statistically significant impact of wind generation on real-time hourly MISO system prices, ranging from an estimated decrease of $0.14 to $0.34 per mega-watt hour, for each 100 mega-watt hours of additional wind generation. It is observed that the estimated marginal impacts of additional wind generation have declined over time. This is likely attributable to the long-term shifts in the supply and demand dynamics experienced in the MISO energy market, as well as to changes made to the MISO market structure to better accommodate variable generation.

Suggested Citation

  • Quint, Dov & Dahlke, Steve, 2019. "The impact of wind generation on wholesale electricity market prices in the midcontinent independent system operator energy market: An empirical investigation," Energy, Elsevier, vol. 169(C), pages 456-466.
    • Handle: RePEc:eee:energy:v:169:y:2019:i:c:p:456-466
    DOI: 10.1016/j.energy.2018.12.028
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    Cited by:

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    3. Olukunle O. Owolabi & Toryn L. J. Schafer & Georgia E. Smits & Sanhita Sengupta & Sean E. Ryan & Lan Wang & David S. Matteson & Mila Getmansky Sherman & Deborah A. Sunter, 2021. "Role of Variable Renewable Energy Penetration on Electricity Price and its Volatility Across Independent System Operators in the United States," Papers 2112.11338, arXiv.org, revised Nov 2022.
    4. Dahlke, Steven & Sterling, John & Meehan, Colin, 2019. "Policy and market drivers for advancing clean energy," OSF Preprints hsbry, Center for Open Science.
    5. Mills, Andrew & Wiser, Ryan & Millstein, Dev & Carvallo, Juan Pablo & Gorman, Will & Seel, Joachim & Jeong, Seongeun, 2021. "The impact of wind, solar, and other factors on the decline in wholesale power prices in the United States," Applied Energy, Elsevier, vol. 283(C).
    6. Alexander Ryota Keeley & Ken’ichi Matsumoto & Kenta Tanaka & Yogi Sugiawan & Shunsuke Managi, 2021. "The Impact of Renewable Energy Generation on the Spot Market Price in Germany: Ex-Post Analysis using Boosting Method," The Energy Journal, , vol. 42(1_suppl), pages 1-22, June.
    7. Doering, Kenji & Sendelbach, Luke & Steinschneider, Scott & Lindsay Anderson, C., 2021. "The effects of wind generation and other market determinants on price spikes," Applied Energy, Elsevier, vol. 300(C).
    8. Liu, Luyao & Bai, Feifei & Su, Chenyu & Ma, Cuiping & Yan, Ruifeng & Li, Hailong & Sun, Qie & Wennersten, Ronald, 2022. "Forecasting the occurrence of extreme electricity prices using a multivariate logistic regression model," Energy, Elsevier, vol. 247(C).
    9. Liu, Tingting & Xu, Jiuping, 2021. "Equilibrium strategy based policy shifts towards the integration of wind power in spot electricity markets: A perspective from China," Energy Policy, Elsevier, vol. 157(C).
    10. Mahmood Hosseini Imani & Ettore Bompard & Pietro Colella & Tao Huang, 2021. "Impact of Wind and Solar Generation on the Italian Zonal Electricity Price," Energies, MDPI, vol. 14(18), pages 1-26, September.
    11. 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).
    12. Tsimopoulos, Evangelos G. & Georgiadis, Michael C., 2021. "Nash equilibria in electricity pool markets with large-scale wind power integration," Energy, Elsevier, vol. 228(C).
    13. Abban, Abdul Rashid & Hasan, Mohammad Z., 2021. "Solar energy penetration and volatility transmission to electricity markets—An Australian perspective," Economic Analysis and Policy, Elsevier, vol. 69(C), pages 434-449.
    14. John Dorrell & Keunjae Lee, 2021. "The Price of Wind: An Empirical Analysis of the Relationship between Wind Energy and Electricity Price across the Residential, Commercial, and Industrial Sectors," Energies, MDPI, vol. 14(12), pages 1-21, June.
    15. Han, Dong & Zhang, Chengzhenghao & Ping, Jian & Yan, Zheng, 2020. "Smart contract architecture for decentralized energy trading and management based on blockchains," Energy, Elsevier, vol. 199(C).
    16. Tsai, Chen-Hao & Figueroa-Acevedo, Armando & Boese, Maire & Li, Yifan & Mohan, Nihal & Okullo, James & Heath, Brandon & Bakke, Jordan, 2020. "Challenges of planning for high renewable futures: Experience in the U.S. midcontinent electricity market," Renewable and Sustainable Energy Reviews, Elsevier, vol. 131(C).
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