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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. McDonald, Paul, 2024. "Interrelationships of renewable energy zones in Queensland: localised effects on capacity value and congestion," Economic Analysis and Policy, Elsevier, vol. 81(C), pages 818-833.
    3. Cullen, Joseph A. & Reynolds, Stanley S., 2023. "Market dynamics and investment in the electricity sector," International Journal of Industrial Organization, Elsevier, vol. 89(C).
    4. Yang, Yuting, 2022. "Electricity interconnection with intermittent renewables," Journal of Environmental Economics and Management, Elsevier, vol. 113(C).
    5. Chu, Yin & Gao, Juanxia & Li, Haoyang, 2023. "Wind power expansion and regional allocative efficiency among fossil-fuel electricity generators," International Journal of Industrial Organization, Elsevier, vol. 91(C).
    6. Westphal, Igor, 2024. "The effects of reducing renewable power intermittency through portfolio diversification," Renewable and Sustainable Energy Reviews, Elsevier, vol. 197(C).
    7. McDonald, Paul, 2023. "Locational and market value of Renewable Energy Zones in Queensland," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 198-213.
    8. Newbery, David, 2023. "Wind, water and wires: Evaluating joint wind and interconnector capacity expansions in hydro-rich regions," Energy Economics, Elsevier, vol. 117(C).
    9. Mian Yang & Ruofan He & Panbing Wan, 2024. "The transfer of provincial officials and electricity transactions in China," Public Choice, Springer, vol. 198(3), pages 377-402, March.
    10. Zhao, Li & Gao, Zhengye & Ren, Shenggang, 2024. "The effects of long–distance power transmission on employment growth: Empirical evidence from ultra–high voltage projects of China," Energy Economics, Elsevier, vol. 138(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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