New data tool explores trends in wholesale power prices and renewable energy supply

May 20, 2021

Exploring Wholesale Energy Price Trends: Introducing the Renewables and Wholesale Electricity Prices (ReWEP) tool

A new visualization tool from Berkeley Lab allows users to explore trends in wholesale electricity prices and their relationship to wind and solar generation. Variable renewable generation can have important impacts to pricing patterns at the local level, but those patterns are often obscured when looking at regional average annual pricing trends.

The Renewables and Wholesale Electricity Prices (ReWEP) tool allows users to compare pricing trends across locations, regions, and a number of different timeframes, down to the nodal level. These comparisons illustrate the ongoing interactions between wind and solar generation and wholesale energy prices.

The ReWEP tool consists of maps, time series, and other interactive figures that provide: (1) a general overview of how average pricing, negative price frequency, and extreme high prices vary over time, and (2) a summary of how pricing patterns are related to wind and solar generation. Interactive functionality allows investigation by transmission regions (ISOs/RTOs), year, and season, and over diurnal cycles.

 

Figure 1. This screen-shot from the ReWEP tool shows the distribution of negative prices across nodes, indicating the concentration of negative prices in the wind-heavy regions near Oklahoma and Kansas. The line graph shows negative price frequency at a particular location in Kansas. The user can select any location on the map to find the annual average price, frequency of negative prices, and the average of the 100 hours in each year with the highest prices.

Figure 2. This screenshot from the ReWEP tool shows how wind and solar generation has increased over time in California. Prices have declined most during high solar hours, though price declines in 2020, in particular, were spread across all hours. Users can select a region and choose either seasonal or annual data.

Figures 1 and 2 above highlight the visualizations that can be created with the tool. The tool can reveal some key observations:

  • Wind and solar generation influence the geographic and temporal distribution of prices, impacts that are somewhat hidden at the regional level.
  • Impacts of wind and solar on prices vary by region: solar impacts are highest in California while wind has big impacts in the interior of the country.
  • Solar strongly impacts diurnal price profiles, especially in California, while wind's impacts vary across hours depending on prevailing wind patterns
  • Frequent negative prices in the wind-rich interior of the county, in northern New York, and in northern New England all highlight regions ripe for transmission investment.
  • Overall, average wholesale prices have declined over the last decade, but prices in regions with high wind or solar have declined most during hours of high wind and solar generation.

To be clear, wind and solar are not the only drivers for wholesale pricing trends: electricity load, natural gas and coal prices, and the flexibility of the fleet of power plants all play a role. As well, the presence of wholesale pricing patterns does not necessarily imply a problem. Instead, pricing patterns emerge from the fundamental characteristics of the generation fleet, and the relationship of those characteristics with wholesale market design and operating and bidding practices. What the patterns do illustrate, however, is that economic signals are shifting. Flexible generation and load that can respond to pricing variations has increasing value, while transmission expansion in regions experiencing over-supply would create benefits.

The ReWEP tool is intended to provide users a way to explore ongoing changes to pricing patterns, including those related to growth in wind and solar deployment.

The ReWEP tool can be found at: https://emp.lbl.gov/renewables-and-wholesale-electricity-prices-rewep

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