Key wholesale power prices in Texas plummeted during 2015 — a drop largely driven by declining natural gas prices.
Wind and natural gas-fired plants also generated record amounts of electricity in Texas, while the share of power from coal plants fell to a record low.
These were among key findings of a report issued this month by the independent monitor of ERCOT’s wholesale electricity markets. ERCOT, or the Electric Reliability Council of Texas, is the organization that oversees the state’s main power grid.
“The market generally performed competitively,” said Dr. David Patton, president of Potomac Economics, the consulting firm that authored the report.
In a presentation to the ERCOT board this week Dr. Patton noted that drops in natural gas prices drove several significant market changes in 2015, including drops in the average real-time energy price. In Texas natural gas commodity prices strongly correlate with wholesale electricity prices.
Key findings of the “2015 State of the Market Report” include:
- The ERCOT-wide average real-time energy price was $26.77 per megawatt hour in 2015. That’s a 34 percent decrease from 2014. The decline was largely driven by a 41 percent drop in natural gas prices.
- Due to the wholesale market conditions, coal plants and nuclear generators likely were not profitable in 2015.
- The percentage of generation from coal fell to 28 percent in 2015. That’s a record low and significantly less than the 36 percent observed in 2014.
- The percentage of generation from natural gas was 48 percent in 2015. That’s an increase from 2014.
- The generation share from wind power reached 12 percent in 2015. The generation share of wind in the ERCOT region has increased during every year since at least 2007.
- A new record for peak energy use was set on Aug. 10, 2015, when demand hit 69,877 megawatts.
- Planning energy reserves remained above a minimum target, and energy shortages were rare during 2015. Reserve margins were expected to exceed minimum targets for the next several years, according to the report.
The State of the Market Report noted that non-wind generators can expect to operate for fewer hours each year as more wind power is added to the grid. However, for reliability purposes the report stated that more non-wind capacity may be needed in the future.
You can read the Independent Market Monitor report here.
R.A. Dyer is a policy analyst for TCAP, a coalition of more than 160 cities and other political subdivisions that purchase electricity in the deregulated market for their own governmental use. Because high energy costs can impact municipal budgets and the ability to fund essential services, TCAP, as part of its mission, actively promotes affordable energy policies. High energy prices also place a burden on local businesses and home consumers.