Congestion is like a traffic jam on electric transmission lines that leads to inefficiency in power markets. It is a problem with the delivery system, not the power plants.
When the electric grid becomes congested, places where power is the cheapest have difficulty flowing to different places on the grid where the power is to be used. This results in differences in power prices across the state. The difference in power prices between point A and point B is the “congestion cost”
“Congestion” is technology neutral, not just a wind thing. So if there is not enough transmission to a part of Texas, all power sources from that area — coal, natural gas, nuclear, wind or solar — will all face the same congestion. Just like a traffic jam on a big highway, all traffic is affected.
The table below shows the average ERCOT market clearing price of electricity in 4 different zones in ERCOT: South (contains Austin), North (contains DFW), Houston, West (contains most of Texas’s wind power plants). This table illustrates several important points:
- when there is enough transmission (e.g. January through March 2007) the power market works efficiently and power prices across the state are about the same. Users throughout the grid can shop for power where it is least expensive.
- If there is not enough transmission to move power through the market efficiently, there can be very large price differences between zones (e.g. May 2008)
- Illustrative example: the average congestion cost between the North zone (where the GreenChoice Batch 6 Hackberry wind farm is currently located) and the South zone (where Austin is located) for May 2009 was a credit of 2 cents per MWh.
NOTE: the $/MWh numbers reported in the table below can be converted to “cents per kilowatt-hour” by dividing by 10.
