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Intermittency and the Value of Renewable Energy

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  • Gautam Gowrisankaran
  • Stanley S. Reynolds
  • Mario Samano
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    Abstract

    A key problem with solar energy is intermittency: solar generators only produce when the sun is shining. This adds to social costs and also requires electricity system operators to reoptimize key decisions with large-scale renewables. We develop a method to quantify the economic value of large-scale renewable energy. We estimate the model for southeastern Arizona. Not accounting for offset CO2, we find social costs of $138.4/MWh for 20% solar generation, of which unforecastable intermittency accounts for $6.1 and intermittency overall for $45.9. With solar installation costs of $1.48/W and CO2 social costs of $36/ton, 20% solar would be welfare neutral.

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    Bibliographic Info

    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 17086.

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    Date of creation: May 2011
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    Handle: RePEc:nbr:nberwo:17086

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    Cited by:
    1. Detert, Neal & Kotani, Koji, 2013. "Real options approach to renewable energy investments in Mongolia," Energy Policy, Elsevier, Elsevier, vol. 56(C), pages 136-150.
    2. Severin Borenstein, 2011. "The Private and Public Economics of Renewable Electricity Generation," NBER Working Papers 17695, National Bureau of Economic Research, Inc.
    3. Lion Hirth, 2012. "The Market Value of Variable Renewables," Working Papers, Fondazione Eni Enrico Mattei 2012.15, Fondazione Eni Enrico Mattei.
    4. Harrison Fell & Joshua Linn, 2012. "Renewable Electricity Policies, Heterogeneity, and Cost Effectiveness," Working Papers, Colorado School of Mines, Division of Economics and Business 2012-07, Colorado School of Mines, Division of Economics and Business.
    5. Průša, Jan & Klimešová, Andrea & Janda, Karel, 2013. "Consumer loss in Czech photovoltaic power plants in 2010–2011," Energy Policy, Elsevier, Elsevier, vol. 63(C), pages 747-755.

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