ERCOT Wind Curtailments: Finding Opportunity for Crypto Mining?

As cryptocurrencies continue to gain traction, an increasingly growing obstacle to crypto mining (the process by which additional coins are created) is the amount of electric load required for mining activities. Marginal power production throughout most of the U.S. is from fossil fuels, so additional load from mining would bring about additional emissions. However, some areas, like the Electric Reliability Council of Texas (ERCOT), have grown renewables capacity significantly throughout the past few years—so much so in fact that not all generation from those renewables is always able to hit the grid.  

Instead, some of the power generated by wind and solar is effectively discharged into the ground through a process known as curtailment. Capturing that energy would benefit the system, and one way to do that is by shifting the load (such as a crypto mining rig) closer to the generating resource, essentially working around any transmission constraints. So, how prevalent are wind curtailments in ERCOT, both throughout the independent system operator (ISO) and on an individual unit level? 

ERCOT’s Wind Curtailments Explained 

The above chart shows a scatterplot with dots representing individual wind units in ERCOT and the amount of megawatt hours (MWh) it has generated vs. the amount of MWh it has curtailed in total from January 2017 to March 2021. At the system level, there is not a significant amount of generation being curtailed. Through that same period, there were around 322 terawatt hours (TWh) of total wind generation, with only 11 TWh of curtailment (around 3% of wind generation). However, this plot shows that curtailments can be an issue on a more local level, so it cannot be assumed that every generator curtails around 3% of generation. 

As seen above, curtailments have an inverse relationship with pricing. Areas with less curtailment indicate that wind is not the marginal generation as often and pricing is slightly higher on average. For the six wind projects selected in the first graphic, this translated to an average spread of about $6/MW since 2017. 

Conclusion 

Using BTU Analytics’ Power View, we can look at where these six projects are located. The units with large volumes of curtailment occur in the Panhandle, which is to be expected, given the large number of wind units, relatively low local demand, and transmission constraints. However, this shows an opportunity around those units to capture not only the lower energy pricing but also volumes that would otherwise be curtailed. This presents interesting opportunities for additional load, storage, or transmission for the area. 

This article was originally published on the BTU Analytics website. 

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