Winds of Change in Texas

 

Rising gas prices spark a rush to wind farms, straining grid capacity and raising larger issues about market design.

When the Public Utility Commission of Texas (PUCT) was drafting rules to encourage the use of renewable energy, it took pains to guard against the chance that power producers would fail to reach the state's target of 400 megawatts (MW) in installed new renewable generation capacity by Jan. 1, 2002. The commission needn't have worried.

In reality, the opposite happened. A spike in natural gas prices starting in the fall of 2000 helped launch a virtual explosion of wind farms in Texas in 2001, as power producers discovered that wind power could serve as a hedge in the fuel mix.

Yet this embarrassment of riches came with its own problems. Lacking the sorts of locational price signals common in PJM, New York, and Eastern electricity markets, builders had constructed nearly 1,000 MW of new wind capacity in West Texas, on the wrong side of a 500-MW transmission constraint in the Pecos River area. That left wind plants partially stranded, lacking full access to load centers farther east.¹

As one legislative aide said last December, it might be easier just to move Dallas out west to the desert, than to move all those windmills.