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Retail Renewable Electricity Rate Outlook 

While anomalies can happen in the wholesale market – think back to the huge price spike with Griddy over the summer – the retail world is usually much more stable. This isn’t necessarily true for the town of Georgetown, Texas though, who is currently seeing higher retail electricity costs as a result of switching to all renewables. 

 

Georgetown is an example of a city generating far more power than needed and having to take financial losses despite having surplus power – an odd but common happening in the power world for those wanting to get rid of excess electricity.

The residents of Georgetown saw their bill raised by 22% from last year. This has more to do with lower gas prices mixed with excess energy that the town takes financial losses for. While a unique case of a 100% renewable town, will the volatility of renewables bleed into retail electricity bills and make them much more erratic? Sort of like Griddy’s wholesale model?

That’s hard to say at this point. Many are still really optimistic about renewables offering a much more promising future, but at this stage, the current paradigm doesn’t yet support a 100% renewable initiative. Checking in with Georgetown will be interesting in a year or two to see how electricity prices have faired.

Machine Learning for Cheaper Electricity Rates?

For renewable customers, some companies are using machine learning to scour utilities for the cheapest renewable electricity. Given the oft-discussed volatility of wholesale electricity prices, especially those that base their prices on something as erratic as wind levels and sunshine (wind and solar), machine learning offers automation and a way to break through the noise of the market to find the proverbial signal. 

What this means is that consumers get the cheapest prices in real-time and get advisories on the wholesale market that directly factors into retail pricing. There are even technological developments that allow smart thermostats to adjust to price spikes ahead of time, meaning that households can cool down or heat up quickly before a costly spike in the wholesale market affects the bill. This would offer incredibly cheap prices if there was dynamic adjustment through connected technologies. 

 

Wholesale and Retail Worlds Collide

The Baker Institute put out a study on the economic impact of the Texas reform in 2002, where the electricity market was deregulated. Through that study they found that the stronger competition of deregulated markets still has discernible effects on wholesale market prices. They also found that although the competitive electricity markets (deregulated areas of Texas) cost higher on average from 2002 and upwards, but that the disparity between deregulated and regulated prices has shrunk considerably in that time.

What to Expect From Wholesale Electricity Rates in 2020 and Beyond 

Using data from 2018 on the wholesale electricity market, we can view the somewhat consistent pricing of wholesale electricity from the ERCOT North hub – from the months of January to June. Yet this consistency is just a lesson in perceived stability, as wholesale electricity, after all,  is rife with volatility. 

Wholesale prices this year alone were a wild ride as graphs spiked and danced to reflect the surging prices of extreme heat. But that’s just the nature of the market; as all commodities go, things fluctuate and you can only ride out the waves until a baseline homeostasis replaces the chaos.

Given that we accept this volatility, what if even more erratic behavior is in the books for wholesale electricity in the near future? 

Let’s explore that question in a little more detail

More Volatility on the Horizon?

 

Let’s pursue an answer to the following question: if wholesale electricity prices fluctuate in tandem with renewable sources like wind and solar, will an increased reliance on renewables simply necessitate a more volatile market?

There has always been a reliability problem for renewables in the sense that wind can stall for days on end, leading to an electricity demand that outweighs electricity generation. 

But when the wind is really rolling, this often means negative wholesale electricity prices. These wholesale prices don’t necessarily mean cheaper retail electricity for consumers, but only those who are trading on the wholesale power market and who can utilize the cheap electricity. Often though, negative wholesale electricity prices simply mean a surplus of electricity generation + a decreased demand, meaning that many companies pay factories to take excess energy off their hands. After all, it’s often cheaper to burn up excess energy than power down an entire factory. 

With this being said though, if renewables continue to grow, and we get closer and closer to an all-renewable grid, will this reliance on wind and solar simply mean more violent fluctuations of negative or exorbitant prices? Unless battery storage continues its positive trajectory, it just may.

Google (And Company) Will Hold a Huge Share of Electricity

According to Green Tech Media, Google has laid claim to even more renewable energy investments, meaning that they will hold the power to sway wholesale markets in the future. And tech giants continue a similar trajectory and push for renewables, the markets might rise and fall in conjunction even more with more green-minded stakeholders. 

But alas, Google isn’t only looking to decarbonize the grid but also to up the ante on energy storage technology, meaning that when the wind blows strongest, and the sun shines its brightest, there will be plenty of energy for the cloudy, windless days.