in News Departments > New & Noteworthy
print the content item

The Electric Reliability Council of Texas (ERCOT) recently conducted an analysis of the likely effects of proposed climate change legislation on electricity prices.

Consistent with a similar study conducted by the PJM Interconnection, ERCOT focused on the near-term impacts of this potential legislation.

ERCOT performed the analysis by simulating the cost-based, hourly dispatch of all existing and committed generation in the ERCOT region to serve the electric load in the region for the year 2013. The generation was dispatched according to its variable cost, including carbon dioxide (CO2) allowance costs, while adhering to the limitations of the transmission system and other reliability requirements.

The change in total annual wholesale power costs (the costs paid by consumers) and wholesale prices (expressed as load-weighted average locational marginal prices), as well as production costs, total CO2 emissions and similar output variables were noted for various scenarios.

Highlights of the study include the following:

- In the reference case, with $7/MMBtu natural gas prices, expected load levels and the existing and committed level of wind and other generation, the CO2 allowance costs must rise to between $40 and $60 per ton in order to reduce CO2 emissions from electric generation in ERCOT to 2005 levels by 2013. This level of allowance costs would result in an annual increase in wholesale power costs of approximately $10 billion and would increase a typical consumer's monthly bill by $27.

- At higher natural gas prices, brought about by increased demand for natural gas due to CO2 emission limitations or other reasons, allowances would rise to a higher cost (well over $60/ton in the case of $10/MMBtu natural gas prices) in order to achieve the desired reductions. At this higher gas price, the annual increase in wholesale power costs to meet the 2005 level of emissions through reductions by generators in the ERCOT region would be in the range of $20 billion.

- Additional wind generation envisioned by the competitive renewable energy zones (CREZ) plan (up to a total of 18,456 MW) reduces CO2 emissions by 17.6 million tons above the reduction due to existing and committed wind generation, even with no carbon emissions limits imposed by climate-change legislation.

- Additional CREZ wind generation allows the targeted emissions reductions to be met at a lower allowance cost. At $7/MMBtu gas, the 2005 CO2 emissions levels are met at an increase in annual wholesale power costs of approximately $7 billion, which is a $3 billion savings compared to the reference case. At this allowance cost, the increase in a typical consumer's monthly bill would be $22.

To read the report, visit ercot.com.

SOURCE: Electric Reliability Council of Texas

Mortenson Construction_id2024

Trachte Inc._id1770
Latest Top Stories

Recapping The Wind Industry's Third-Quarter Deals

Mercom Capital Group recaps investment and merger and acquisition activity during July, August and September.


Yearly Installed Capacity Figures Already Beat 2013 Numbers, More Wind On The Way: AWEA

While the American Wind Energy Association (AWEA) lobbies Congress to extend the production tax credit, the association notes wind projects now under construction signal a vibrant 2015.


Yahoo Inks Contract To Buy Kansas Wind Power

The Internet company plans to log in to the Alexander wind project, which is being built by community developer OwnEnergy.


Could Initial Offshore Wind Projects Crash New England's REC Market?

Some are concerned that the first offshore wind projects could negatively impact pricing of renewable energy credits (RECs) in New England.


Catching Up With The DOE's Down-Select Offshore Winners

The three recipients of key U.S. Department of Energy (DOE) funding provide updates on their offshore wind demonstration projects.

Renewable NRG_id1934
Hybrid Energy Innovations 2015
Canwea_id1984