Competitive renewable energy zones in Texas : suggestions for the case of Turkey

As an energy-importing developing country, Turkey depends heavily on imported petroleum and natural gas. The increase in the global petroleum price has affected the Turkish economy adversely in the last decade. Renewable energy is an important alternative in reducing Turkey’s energy dependency. Turkey’s strategies are improving domestic production and diversifying energy sources for the security of supply. New investments, especially in renewables, have been chosen to achieve these objectives. As a model for Turkey, Texas is the leader in non-hydroelectric renewable energy production in the U.S. and has one of the world’s most competitive electricity markets. However, wind generation creates unique challenges for the Electric Reliability Council of Texas (ERCOT), the transmission system operator of Texas. The market environment has forced the Public Utility Commission of Texas (PUCT) to develop unique deregulated energy markets. In 2005, the Texas Legislature passed Senate Bill 20, in part to break the deadlock between transmission and wind generation development. This legislation instructed the PUCT to establish Competitive Renewable Energy Zones (CREZs) throughout the State, and to designate new transmission projects to serve these zones. In this context, first of all, the electricity market development in Turkey is introduced in terms of renewable energy, especially wind power. Next, considering wind power, the progress in the Texas electricity market is investigated. Subsequently, we examine the development of CREZs in Texas from a regulatory perspective and discuss Texas’ policy initiatives, including the designation of CREZs. Finally, we review the impact of wind power on the primary electricity market of Texas and evaluate market conditions and barriers to renewable energy use in Turkey in order to extract suggestions. This experience may be particularly instructive to Turkey, which has a similar market structure on the supply and transmission sides. This study suggests ways that Turkey might handle renewable applications in combination with existing transmission constraints.