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Effects of Changes in Wholesale Electricity Market Structure on Wind Generation in the Midwestern United States

Steve Dahlke ()
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Steve Dahlke: Division of Economics and Business, Colorado School of Mines

No 2017-02, Working Papers from Colorado School of Mines, Division of Economics and Business

Abstract: This paper estimates the effect of starting the Midcontinent ISO electricity market in 2005 on wind generation. We find an average increase in wind plant capacity factors of 5.0-6.7% associated with the start of the market, relative to neighboring wind plants not in the market. These results are robust to potentially confounding variation associated with wind speed differences determined by weather. The increased capacity factors are likely attributed to reduced wind plant curtailment from operational improvements associated with starting the market, including improved transmission interconnections and more granular generator dispatch scheduling. We formulate a simulation model that demonstrates this mechanism. While there has been plenty of anecdotal evidence from technical experts and market participants that competitive wholesale markets are beneficial for wind energy, this analysis provides the first statistical evidence to support that claim.

Keywords: electricity market; renewable energy; wind energy; energy economics; wind generation (search for similar items in EconPapers)
JEL-codes: Q40 Q42 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene and nep-reg
Date: 2017-10
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