Texas currently ranks as the sixth largest wind producer in the world (if it were a country) and that is having the effect of lowering electricity prices in Texas, an analysis by Bernstein Research finds.
According to the WSJ Environmental Capital blog:
The more wind power there is—and Texas is the sixth-biggest wind power country in the world–the less need there is to turn to gas-fired turbines to cover the last bit of demand. Bernstein figures this trend will only accelerate in the next few years:
[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.
Bernstein says that utilities tied to traditional businesses could be hurt, as demand declines and margins come under pressure — which means it behooves these players to get ahead of the curve, not behind it.