Low gas prices, warm weather during heating months, and booming wind production all pushed down wholesale electricity generation prices across America once again.
Already low in 2011, America's wholesale on-peak electricity prices plummeted 24% to 39% in the January-June 2012, compared to the same 6 months of 2011. www.eia.gov/todayinenergy/detail.cfm?id=7490. This most recent price plummet is truly astonishing.
Off-peak prices were also down but showed much bigger drops east of the Mississippi River. Off-peak prices actually climbed 10% in California (as a result of nuclear plant shutdowns), while dropping 42% in New York.
The power price collapse even reached Texas, where a shortage of peak capacity has caused repeated reliability stresses during the last 18 months. Texas on-peak prices were down 30% and off-peak prices down 4%. Texas off-peak wholesale prices averaged just 1.85 cents per kilowatt-hour, a true bargain.
Impressively Texas' on-peak and off-peak electricity prices are below those in the huge PJM market, below those in New England Market, and below those in the Midwest or MiSo market. Texas' off-peak price was even below the off-peak price in Southern market. Why?
Wind is part of the answer. Texas' on-peak and off-peak power prices would be much higher without 10,000 megawatts of installed wind power that bids zero and takes whatever prices at which the wholesale market clears. Indeed, regions that reach the milestone of 10% of their power coming from wind will put substantial downward pressure on their wholesale electricity generation prices.
In fact, the nation's 50,000 megawatts of wind and its substantial hydro generation, both zero fuel cost power sources that bid zero into markets, are concentrated West of the Mississippi river, exactly where the nation's lowest wholesale generation prices are located.