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Transmission constraints, intermittent renewables and welfare

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  • LaRiviere, Jacob
  • Lyu, Xueying

Abstract

We use the roll-out of a large transmission expansion in Texas’ electricity market to measure the market impacts of the transmission expansion on benefits of increased renewable capacity. The value of transmission expansion varies based upon how new renewable investment over the sample is attributed to transmission expansion: payback periods range from roughly 40 years (assuming no investment impact) to roughly 20 years (assuming observed capacity increases are due to transmission expansion). Payback periods also depend on how global pollutants like carbon and regional pollutants like PM 2.5 are internalized by regional policy makers, reducing the payback period further to as little as 11 years.

Suggested Citation

  • LaRiviere, Jacob & Lyu, Xueying, 2022. "Transmission constraints, intermittent renewables and welfare," Journal of Environmental Economics and Management, Elsevier, vol. 112(C).
    • Handle: RePEc:eee:jeeman:v:112:y:2022:i:c:s0095069622000092
    DOI: 10.1016/j.jeem.2022.102618
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    Cited by:

    1. Newbery, D., 2022. "Wind, water and wires: evaluating joint wind and interconnector capacity expansions in hydro-rich regions," Cambridge Working Papers in Economics 2212, Faculty of Economics, University of Cambridge.
    2. Newbery, David, 2023. "Wind, water and wires: Evaluating joint wind and interconnector capacity expansions in hydro-rich regions," Energy Economics, Elsevier, vol. 117(C).
    3. Yang, Yuting, 2022. "Electricity interconnection with intermittent renewables," Journal of Environmental Economics and Management, Elsevier, vol. 113(C).

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    More about this item

    Keywords

    Electricity; Industrial organization; Policy instruments;
    All these keywords.

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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