Domestic wholesale electricity prices were lower and less volatile in 2020 versus 2019, though in the latter half of the year, prices did trend higher for western states, the Energy Information Administration (EIA) said Friday.
Prices in the California Independent System Operator (CAISO) market were 5% lower, while the Electric Reliability Council of Texas (ERCOT) saw a 45% reduction through 2020, EIA data showed.
Wholesale prices in ERCOT averaged $22/MWh in 2020, versus $38/MWh in 2019.
“Average Texas electricity prices were lower this year primarily because prices were less volatile (had fewer price spikes) than last year,” researchers said.
In 2019, the monthly average day-ahead wholesale price spiked to $127/MWh, with prices reaching the $9,000/MWh maximum allowable price in some hours.
The price spike came as electricity demand neared the available capacity limit, researchers said. Milder temperatures and additional wind capacity also expanded available generation capacity in 2020.
When comparing CAISO’s first six months of 2020 to the comparable 2019 period, day-ahead prices were 34% lower in 2020, reflecting the almost record low natural gas fuel costs and reduced electricity demand due to stay-at-home orders imposed to slow the spread of the coronavirus.
In most other regions of the country, monthly averages for daily wholesale prices were relatively flat compared to past years.
Prices in regions serviced by the Midcontinent Independent Service Operator were 14% lower in 2020, and those in the mid-Atlantic serviced by the PJM Interconnection were 22% lower.
The pandemic is to blame for overall low electricity demand, especially in the commercial and industrial sectors. Lower natural gas prices also contributed to lower and more stable wholesale electricity prices.
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