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Competitive Markets and Renewables

This paper, "Competitive Markets and Renewables: The Effect of Wholesale Electricity Market Restructuring on Wind Generation in the Midwest," estimates the effect of having a competitive wholesale electricity market on wind plant generation for the Midcontinent Independent System Operator (MISO) electricity market.

This question is of interest today as states consider expanding competitive wholesale markets as a strategy to manage growing levels of wind and solar energy. Using publically available data, we build an econometric model that estimates the effect of the MISO real-time market on wind energy production. We find the market resulted in an increase of average wind plant capacity factors by 5.0 – 6.7%, relative to neighboring wind plants not in the market. The model statistically controls for potentially confounding variables, including wind speed differences determined by weather and plant technology differences. The increased capacity factors are likely attributed to reduced wind plant curtailment associated with operational benefits specific to an ISO market. These benefits include greater regional interconnection of the transmission system, and shorter intervals for generator dispatch scheduling.

While technical experts and market participants have shared anecdotal evidence that ISO markets are beneficial for wind energy, this analysis provides the first statistical evidence to support that claim.