Texas CREZ lines delivering grid benefits at $7B price tag

Dive Brief:

  • Texas wind power reached a new instantaneous peak output of 10,296 megawatts on March 26, 29% of total electricity, after setting new records twice in the previous week. According to grid operator Electric Reliability Council of Texas (ERCOT), more new records are expected as Texas’s 12,000-plus megawatt wind capacity continues to grow.
  • Texas wind’s record-setting performance is partially due to the completion of the Competitive Renewable Energy Zones (CREZ) transmission expansion specifically designed to deliver West Texas and Panhandle winds to ERCOT load centers in Dallas, Ft. Worth, Austin, and San Antonio and to reduce wind curtailments.
  • Curtailment dropped steadily as the 3,500 mile CREZ transmission system build out advanced and wind-related negative electricity pricing decreased as the new transmission reduced oversupply problems by taking wind energy-generated electricity to a wider range of demand areas.

Dive Insight:

Negative pricing occurs when there is more electricity supply than demand and wind generators become willing to accept below zero prices for their output because they have no fuel costs and can get a $0.023 per kilowatt-hour production tax credit for the electricity the grid takes.

Texas added 7,000 megawatts of the state’s current U.S.-leading 12,000-plus megawatts of wind capacity in 2006-09, creating major transmission congestion and causing ERCOT to curtail wind to protect the grid.

In 2008, the Public Utility Commission of Texas (PUCT) established five CREZs where there is high wind power potential and authorized an 18,500 megawatt wind carrying capacity transmission expansion. By the end of 2013, all the CREZ projects had been energized on schedule at a total cost of $7 billion.

A perhaps more important factor in Texas wind’s new records is that wind’s vital Production Tax Credit was restructured last year to allow eligibility to projects that commenced construction during 2013 instead of only to those that went online during the year, resulting in more than 7,000 megawatts of in-construction capacity that began coming online this year.

Filed Under: Generation Transmission & Distribution Regulation & Policy