Wind Power In Texas Is Cutting The Cost Of Electricity

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Wind power is lowering the cost of electricity in Texas, and hurting some utilities’ margins, says Bernstein Research, via Environmental Capital.

Wind is a cheaper alternative than natural gas fired turbines to cover some demand. As more wind power blows in Texas, less natural gas is needed says Bernstein:

[A]t hours of relatively low power demand, it will no longer be necessary to dispatch high cost gas fired generators to meet the prevailing load; rather, the system’s wind, nuclear and coal fired power plants will be sufficient to meet demand. As power prices are set by the variable cost of operation of the last unit dispatched, wind can have a material impact on the price of power.

The effects of this are varied, says Tom Benning at Environmental Capital. He indicates that it means natural gas prices, which are already low, will slump further as demand decreases. Also, he highlights this from Berstein, “The growth of wind power in ERCOT over the next three years will markedly lower the consumption of gas and coal by conventional generators.”

According to Bernstein this puts Energy Future Holdings (formerly TXU), NRG Energy and PNM Resources at the most risk due to falling margins.

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