The impact of wind, solar, and other factors on the decline in wholesale power prices in the United States

Mills, Andrew; Wiser, Ryan; Millstein, Dev; Carvallo, Juan Pablo; Gorman, Will; Seel, Joachim; Jeong, Seongeun

doi:10.1016/j.apenergy.2020.116266

The impact of wind, solar, and other factors on the decline in wholesale power prices in the United States

Journal Article · Wed Nov 25 00:00:00 EST 2020 · Applied Energy

DOI:https://doi.org/10.1016/j.apenergy.2020.116266· OSTI ID:1737596

Mills, Andrew ^[1]; Wiser, Ryan ^[1]; Millstein, Dev ^[1]; Carvallo, Juan Pablo ^[1]; Gorman, Will ^[1]; Seel, Joachim ^[1]; Jeong, Seongeun ^[1]

Lawrence Berkeley National Lab. (LBNL), Berkeley, CA (United States)

Across multiple organized wholesale power markets in the United States, annual average prices declined by 19–64 dollars per MWh between 2008 and 2017 while retirements of thermal power plants accelerated. Several prominent changes over the last decade are often discussed as contributors to this decline in prices. These include growth in wind and solar, a reduction in the price of natural gas, and weakened load growth. Here we construct a fundamental supply curve model for each of seven organized wholesale market regions and use counterfactual simulations to assess the degree to which wind and solar—among other factors—have influenced wholesale electricity prices. We find that growth in wind and solar since 2008 reduced average annual wholesale electricity prices by less than 3 dollars per MWh. In contrast the decline in natural gas prices reduced wholesale prices by 7–53 dollars per MWh, depending on the region. This suggests that recent thermal-plant retirements in the U.S. are primarily due to low natural gas prices, not growth in wind and solar. Fully isolating the impact of individual factors, however, is limited by non-linear interactions between factors.

View Accepted Manuscript (DOE)

Research Organization:: Lawrence Berkeley National Laboratory (LBNL), Berkeley, CA (United States)

Sponsoring Organization:: USDOE; USDOE Office of Energy Efficiency and Renewable Energy (EERE)

Grant/Contract Number:: AC02-05CH11231

OSTI ID:: 1737596

Alternate ID(s):: OSTI ID: 1859668
OSTI ID: 23187617

Journal Information:: Applied Energy, Journal Name: Applied Energy Journal Issue: C Vol. 283; ISSN 0306-2619

Publisher:: ElsevierCopyright Statement

Country of Publication:: United States

Language:: English

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