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Emissions, Transmission, and the Environmental Value of Renewable Energy

Author

Listed:
  • Harrison Fell
  • Daniel T. Kaffine
  • Kevin Novan

Abstract

We examine how transmission congestion alters the environmental benefits provided by renewable generation. Using hourly data from the Texas and midcontinent electricity markets, we find that relaxing transmission constraints between the wind-rich areas and the demand centers of the respective markets conservatively increases the nonmarket value of wind by 30 percent for Texas and 17 percent for midcontinent markets. Much of this increase in the nonmarket value arises from a redistribution in where air quality improvements occur—when transmission is not constrained, wind offsets much more pollution from fossil fuel units located near highly populated demand centers.

Suggested Citation

  • Harrison Fell & Daniel T. Kaffine & Kevin Novan, 2021. "Emissions, Transmission, and the Environmental Value of Renewable Energy," American Economic Journal: Economic Policy, American Economic Association, vol. 13(2), pages 241-272, May.
    • Handle: RePEc:aea:aejpol:v:13:y:2021:i:2:p:241-72
    DOI: 10.1257/pol.20190258
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    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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