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Wind and Solar Curtailments in ERCOT

ERCOT has certainly had its struggles recently. There have been some extreme examples such as Winter Storm Uri last year and early season heat bringing on extreme congestion and negative prices this month. However, one struggle that continues grow is how to get wind and solar electrons to market. This is nothing new to commodity markets as midstream (transmission) typically lags upstream production (wind and solar generation). Today we’ll look at how renewables curtailments caused by congestion continue to grow, in turn, dampening the ESG impact and emissions reduction potential for wind and solar projects in ERCOT.

Wind curtailments are nothing new in ERCOT, solar curtailments, on the other hand, are a little more novel. Previously, there have been blips of material solar curtailment, however recent months have seen a significant rise in magnitudes. In March of this year, solar curtailments averaged nearly 800 MW per hour. Wind curtailments have been steadily on the rise hitting more than 1.6 GW in March, as shown below.

At a zonal level, it’s no surprise that ERCOT West would account for the largest volume of curtailments over the last year since it has the most installed wind and solar capacity by far. ERCOT West accounted for 60% of ERCOT’s total curtailments with just over 5 TWh curtailed in the last year.

To control for the magnitude differences between zones in installed capacity, we can look at the amount of curtailment as a percent of expected generation. Using this method, as shown in the chart in the graphic below, shows that while wind accounts for the bulk of curtailments, solar generators curtail their generation at much higher rates in ERCOT’s West. While Panhandle does show a much more extreme trend, that should be taken with a grain of salt since Misae Solar is the only operational facility currently in that zone.

We can dig in even further and look at curtailments at a project level to discover more trends. For example, while wind curtailments for the Southern Zone in the graphic above are coming in at the middle of the pack with a modest 5% of generation curtailed, wind generators at a project level are disproportionately represented in the top curtailers by facility. The graphic below shows the rate of curtailment (curtailment per expected generation) for the last year at a project level.

Duke takes two out of three top spots with Ocotillo Windpower in Howard County (ERCOT West) in the top spot and Mesteno Wind in Starr County (ERCOT South). The third spot is taken by Iberdola’s Penascal Wind Farm just south of Corpus Christi on the coast in Kenedy County (ERCOT South). The top solar curtailer, the aforementioned Misae Solar in Childress County (ERCOT Panhandle), sits in the heart of deep congestion between the Panhandle and West zones, leading to more than 20% of their expected generation being curtailed in the previous year.

With 108 GW of wind and solar capacity proposed in ERCOT, the issue of curtailments will continue to grow. Solar curtailments will likely start to outpace wind on a monthly basis in the next couple years given that 90 GW of the total capacity proposed is solar. While PPAs, hedges, and tax credits can mute the financial impact of curtailments, congestion, and subsequent weak pricing to the projects themselves, every wind and solar electron that is curtailed could have served load or been stored. As the US, utilities, and developers continue to push to decarbonize the grid, every electron lost will matter.

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Matthew Hoza is the Head of US Power Markets for FactSet. Currently he is leading the team responsible for the development of FactSet’s suite of power market data and analysis solutions.

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