Survey of ERCOT Developers Confirms 100% of Projects Have Positive Basis

DALLAS, TX - A recently published report from Wood & Mackenzie confirms that every single development-stage solar project in the entire state of Texas will have a positive settlement basis when completed.

Wellington Xiang, who lead the survey for “Wood Mac”, says he was only slightly surprised by the results. “On one hand, it might seem surprising - or even mathematically impossible - that literally 100% of the projects under consideration in this market could all have a positive basis, given the mechanism itself is specifically designed to result in net zero basis in the aggregate. But that’s before you hear about how carefully these developers have chosen their sites using proprietary techniques and decades of experience in the market. For example, did you know that some people are using Google Earth now? Wild stuff.”

The ERCOT “Zonal Basis” or “Congestion Pricing” mechanism is designed to incentivize generation asset developers to site projects in places where transmission/distribution congestion is less of an issue, and disincentive development of assets which exacerbate congestion. Traditionally, projects cited in the panhandle - where wind generation abounds - or the west - where cheap land combines with excellent irradiance to attract solar projects - carry negative basis. Nevertheless, not a single survey respondent from any region of the state indicated that any of their projects would be subject to negative basis.

One respondent, Chet Macmillan, said "so my West Texas project will connect and move electricity through Pecos county, (which has absolutely no load whatsoever) along with about seven dozen other solar projects all sharing the same 112 kV line; then, once I get to West Hub, I’ll need to move my electricity across the state to the South Hub which is where electricity is actually needed in the state. But what you haven’t considered is that my site is right next to the POI. That means I can’t lose, people. And also someone told me I could “sign a hedge” as a fallback option. Now…do I know what that actually means? I do not. But… this one guy I went to college with works at a hedge fund now, and he drives a Maserati… so I think I’m good. And remember…signing the hedge fund or whatever….that’s my plan B.”

At press time reports emerged that Macmillan had entered into an LOI to sell his project to a Korean chaebol for $0.12/W.