The ERCOT wholesale market design seeks maximum cost efficiency of the generation system by encouraging power plants with the lowest operating costs to run first. Since wind (with zero fuel cost) has lower operating cost than coal (with finite fuel cost), additions of large quantities of wind power are likely to reduce the operating hours of coal plants in ERCOT.
This is a good thing for electric consumers in Texas, but causes concern for coal plant owners due to:
- lower average market clearing prices,
- lower number of operating hours,
- more challenging operating environment (to ramp the coal plant up and down as dictated by market economics)
As part of the Texas “Competitive Renewable Energy Zone” (CREZ) proceedings, the Electric Reliability Council of Texas (ERCOT) filed information that estimated that CREZ scenario #2 (the scenario ultimately selected by the PUC of Texas which would support up to 18,500 MW of wind power) would reduce the ERCOT-wide production of coal power annually by about 10% (from 155 GWh to 140 GWh)
SOURCE: Third Technical Conference, ERCOT’s Responses to Parties’ Follow-Up Questions; Public Utility Commission of Texas Docket 33672; Item 1114; Filed May 15, 2008.
http://interchange.puc.state.tx.us/WebApp/Interchange/Documents/33672_1114_584050.PDF
