Renewable Energy
Paper Session
Friday, Jan. 7, 2022 3:45 PM - 5:45 PM (EST)
- Chair: Jacob LaRiviere, University of Washington and University of Tennessee
Valuing Solar Subsidies
Abstract
The rate at which individuals trade future consumption for present consumption is important across a rangeof economic behaviors, including savings, human capital formation, health maintenance, etc. Laboratory
experiments on intertemporal decision-making are numerous, but credible quasi-experimental estimates of
discount rates revealed by market decisions are relatively scarce, and evidence on how discount rates vary
with demographics is virtually nonexistent. The latter is critically important in evaluating the distributional impacts of subsidies and taxes, which are sometimes applied to upfront purchases, such as electric vehicle subsidies, and sometimes to consumption inputs that accrue over time, such as gasoline taxes.
This paper employs rich and unique micro-data on rooftop solar panel adoption and on the expected returns
from solar panel adoption in California to estimate heterogeneous discount rates by wealth. Solar purchases entail an upfront cost to install panels that generate future electricity cost savings. Using proprietary data on rooftop-specific, expected electricity generation of potential solar installations as a function of installation size, solar adoption decisions, household electricity consumption data, and household-specific wealth, income and other demographic information, we estimate a dynamic, structural model of solar sizing and adoption. Discount rates are identified from plausibly exogenous variation in the future savings from installing solar due to variation in irradiance, relative to the upfront costs of installing solar, and from discrete changes in electricity rates across administratively determined climate zones within the state.
We estimate implied individual discount rates of 8.6%, 12%, and 21% for high, medium, and low wealth
households in California. Our results imply a smaller role for the energy paradox in explaining consumer
decisions and that current net-energy-metering policies that subsidize future solar electricity generation at the retail rate are regressive, which implies that decreasing NEM rates and increasing upfront subsidies would increase adoption of solar by lower-wealth households.
Acute Health Responses to Renewable Energy
Abstract
We study the effect of wind generation in Texas on near-term health outcomes: daily emergency department (ED) admission rates, of likely affected areas. In doing so, we build a causal chain showing Texas wind generation displaces fossil fuel plants in east Texas, leading to air-quality improvements in these areas, and, finally, reduces zip-code-level ED admission rates among older citizens for ailments likely related to air quality. Importantly, we do not fi nd evidence that wind energy has signifi cant effects on ED admission rates for ailments likely unrelated to air quality.We consider several other robustness checks and checks of wind-generation effect heterogeneity. Consistent with effects on air quality, we nd wind generation reduces ED admission rates by more during periods with lower natural gas prices and without grid congestion. However, while we nd the intra-day timing of wind generation has some effect on air quality, with more wind generation during off-peak, night hours leading to larger improvements in average daily air-quality measures, the intra-day timing of wind generation appears to have little if any differential effect on ED admission rates.
Spatially, we nd a larger effect of wind energy on air quality improvements and ED admission rates for areas closer to coal plants and areas with lower incomes. For areas with a relatively high percentage of racial minority resident, we find evidence that wind generation has less of an effect on air-quality improvements. However, wind generation does not appear to have a differential effect on ED admission rates for these areas with a higher percentage of racial minorities. Thus, while often health effects line up well with air-quality effects, in some instances the wind generation effect across these two dependent variables deviates, suggesting a more nuanced relationship between spatial and temporal environmental improvements and resulting human health impacts.
Wiring America: The Short- and Long-Run Effects of Electricity Grid Expansion
Abstract
According to the Net-Zero America study, the US needs to triple its electricity grid in order to decarbonize by 2050 (Larson et al. 2021). This paper examines the impact of large scale grid expansion on price-cost markups, emissions from fossil fuel generators, and wind investment. I focus on the rollout of a grid expansion project that linked windy areas in west Texas to population centers in the east. I find moderate declines in markups and emissions with total annual benefits of roughly $100 million in the short-run. Counties that received investment in transmission infrastructure saw significantly higher wind capacity (+202%) in the long-run, preventing $271 million worth of carbon emissions in 2019. Investments in grid level storage and grid-upgrades can be useful in enhancing the benefits of transmission expansion.Discussant(s)
Johannes Mauritzen
,
BI Norwegian Business School
Laura Grant
,
Claremont McKenna College
Kevin Novan
,
University of California-Davis
Jacob LaRiviere
,
University of Washington and University of Tennessee
JEL Classifications
- Q4 - Energy