Journal of Energy Markets

Incremental wind energy development in the Midcontinent Independent System Operator electricity markets of the United States

Han Qi, Kang Hua Cao, Chi Keung Woo and Raymond Li

  • We analyse profitability of wind power purchasing agreements and tolling agreements.
  • Incremental wind energy development (WED) for the 2023-2042 period is estimated.
  • We find incremental WED of up to 441% without causing inadequate generation investment incentives.
  • It is shown that market forces alone may suffice to induce large-scale incremental WED.

In this paper we project how much incremental wind energy development may occur without causing inadequate investment incentives (also known as missing money) for wind generation and natural-gas-fired generation in the day-ahead market and real-time market of the Midcontinent Independent System Operator (MISO) in the United States. Using a large sample of hourly data for the 82-month period of January 1, 2014 to October 31, 2020, we document that the day-ahead market’s hourly investment incentives move with the day-ahead forecast of daily natural gas prices; MISO’s day-ahead hourly requirements of ancillary services; MISO’s zonal day-ahead hourly schedules of nuclear generation, wind generation and must-run generation; and MISO’s zonal day-ahead forecasts of hourly loads. Findings based on the real-time market’s hourly data tell a similar story. Further, the negative effect of incremental wind energy development on investment incentives over the forward-looking period of 2023–42 is offset by the positive effect of a rising natural gas price, nuclear plant retirement, declining must-run generation and growing demand. In the extreme case of nuclear plant retirement and zero must-run generation, incremental wind energy development of up to around 441% of the existing level of wind generation may occur as a market-based outcome without missing money in MISO’s day-ahead market.

Sorry, our subscription options are not loading right now

Please try again later. Get in touch with our customer services team if this issue persists.

New to View our subscription options

You need to sign in to use this feature. If you don’t have a account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here