Throughout 2021, we saw an increasing focus on transitioning to renewable energy resources and clean energy throughout the world. When Biden came into office, the US renewed its focus on efforts towards a clean energy future that had been abandoned under the previous president. While there is no denying that it is necessary to continue developing renewable energy resources, replacing thermal resources with renewables is not a one-for-one tradeoff. In addition to intermittency issues, renewable penetration may cause unintended downstream market effects. In this blog, we’ll look into the effects that increased renewable penetration may be having on power prices in RTOs.
In the below chart, we see renewables by largest contributor, monthly average generation, 2017-2021: RED=CAISO/BLUE=SPPISO/GREEN=ERCOT/ PURPLE=MISO
The renewable march continues onward throughout the country, increasing year over year, with a steady increase observed at the end of 2021.
Aside from the intermittency issue, renewable generation sources are also located in areas conducive to producing their respective fuels (windy or sunny areas). This contingency, combined with a “not in my backyard” phenomenon, may have a significant impact on congestion, as our transmission system was not originally designed to accommodate renewable generation sources in distinct or remote areas of the country. In the below chart, we see ISO Real-Time Congestion, monthly average, 2017-2021: RED=CAISO/BLUE=SPPISO/GREEN=ERCOT/ PURPLE=MISO
We can see a correlation between increased renewable penetration and increased congestion. While not completely surprising, the data exposes new challenges facing ISO market operations.
In the below chart we see Average US Retail Consumer Electric Rates Oct 2017-September 2021.
The chart above indicates that there may be a correlation between increased renewables, increased congestion, and an increased price of power for ratepayers throughout the country.
Increasing renewable generation is an important goal throughout the world. However, it is worth acknowledging that it may not be a one-for-one exchange. Increasing renewable and clean energy will continue to prove a challenge, and creative solutions will be necessary, whether that comes in the form of new nuclear energy technology, utility-scale batteries, or technology yet to be invented.
While Yes Energy doesn’t have the answers to these questions, we do have the data you need to make informed decisions as the energy transition marches on. Analyze historical and real-time data to prepare for the future, and ensure informed and strategic decision making. Whether you work in virtual trading, the utility space, or renewable development, we offer the solutions to guide you into the future.
Want to receive our latest insights in your inbox?
To schedule a complimentary consultation with one of our industry experts, click here.