Surge of renewable generation leads to numerous SPP records, drop in power prices

The Southwest Power Pool set multiple renewable records March 28 and 29, including marking the first time a regional transmission organization served more than 90% of its load with renewables, as the surge in renewables drove down wholesale power prices.

Strong winds helped SPP sets records for renewable energy penetration, renewable energy production and wind generation production.

"In a decade's time, our region has gone from thinking of 25% renewable penetration levels as nearly unreachable to a point where we regularly exceed 75% without reliability concerns," SPP Senior Vice President of Operations Bruce Rew said in a March 29 statement. "We're able to manage wind generation more effectively than other, smaller systems can because we've got a huge pool of resources to draw from."

A storm system over the Midwest brought increased wind speeds across the SPP region with 28 of the 38 weather reports focused on wind speed, according to the National Weather Service Storm Prediction Center.

"We expect wind generation to increase in April compared to the average for March-to-date, but soften from May onwards on seasonal factors," said Giuliano Bordignon, S&P Global Commodity Insights lead analyst for North American power.

Records

SPP set a renewable energy penetration record of 90.2% at 2:42am CT March 29, surpassing the previous record of 87.5% from May 8, 2021. This makes SPP the first RTO to serve more than 90% of its load with renewables, SPP said in a March 29 statement. Of total demand, 88.5% was served by wind, beating the previous wind penetration record of 84%, also set May 8, 2021.

In addition, SPP set a renewable energy production record of 23.802 GW at 9:25pm March 28, breaking the previous record of 21.82 GW from Feb. 15, SPP said March 29.

Later that evening, SPP set a wind production record of 22.915 GW at 10:34pm March 28, surpassing the previous record of 21.82 GW from Feb. 15.

As wind surged to average as much as 69% of the total fuel mix March 29, coal-fired generation was more than cut in half over night to average nearly 13% of the total mix for March 29, according to SPP data. So far in 2022, wind has averaged 43% of the mix, followed by coal with 33.7% of the market share.

Price impact

The increase in renewable generation pulled down real-time around-the-clock power prices 28% of the time at SPP North Hub between March 1-29, and 23% of the time at SPP South Hub, Bordignon said.

North Hub off-peak day-ahead locational marginal prices sank to $6.73/MWh March 29, as South Hub fell to minus $9.41/MWh, according to SPP data. North Hub off-peak has averaged about $7.75/MWh so far in March, 61% higher year on year, while South Hub off-peak has averaged around $12.25/MWh, 123% higher.

SPP wind growth

SPP has more than 66 GW of renewable generation in its generator interconnection queue.

"We expect 5 GW of capacity additions between April and December 2022, of which 3.5 GW are slated for December, thus carrying risks to be delayed to 2023," Bordignon said. "Beyond 2023, when we expect 2.4 GW of wind to come online, there is a large uncertainty as capacity additions are tied to transmission grid upgrades."

Several states in SPP's footprint rank in the top 10 states for wind capacity, according to the American Clean Power Association's quarterly report for Q4 2021(opens in a new tab). Oklahoma added 1.5 GW in Q4, Kansas 931 MW and Iowa 595 MW, while the Dakotas added a combined 915 MW.

SPP set a record in 2020 as the first US independent system operator or regional transmission organization to have wind generation lead its fuel stack at 32%. In 2021, coal-fired generation narrowly beat out wind.

"A big reason for this shift is the large increase in natural gas prices in 2021 compared to 2020," SPP spokeswoman Meghan Sever said in January. "This resulted in coal being a more economic option, and it replaced some natural gas production. Wind contributed significantly during the fourth quarter of 2021, but it still came in slightly under coal."