Revenue analysis of spot and forward solarenergy sales in Texas

Texas is the largest electricity-consuming state in the United States and leads thenation in variable renewable energy (VRE) development. It projects a huge increasein solar plant construction, despite VRE development's "cannibalization effect" onthe investment incentive for solar generation and the rising popularity of short-term VRE power purchase agreements in the United States. Our empirical investigationof short-term spot and forward solar energy sales first uses Texas's monthly whole-sale electricity market data for February 2016 to December 2021 to forecast theaverage daytime (07:00-19:00) spot energy prices and their standard deviations forforward-looking periods of one year, three years, five years and ten years. It thenapplies the price forecast results to analyze the revenue forecasts for a solar gener-ation developer's spot and forward energy sales, revealing that a new solar plant'srevenue forecast level (respectively, volatility) increases (respectively, decreases)with a short-term solar power purchase agreement's forward energy price. When theforward energy price is below (respectively, above) the spot energy price forecast,the developer's short-term power purchase agreement offer in response to a load-serving entity's VRE procurement auction announcement is for a megawatt-fraction(respectively, 100%) of the plant's energy output.