IDEAS home Printed from https://ideas.repec.org/a/spr/ediscc/v8y2024i2d10.1007_s41885-024-00146-4.html
   My bibliography  Save this article

United States Electric Utility Adaptation to Natural Hazards and Green Power Mandates

Author

Listed:
  • Robert Huang

    (University of Southern California)

  • Matthew E. Kahn

    (University of Southern California)

Abstract

Access to electricity is a crucial determinant of quality of life and productivity. The United States has a highly reliable electricity grid, but it faces new resilience challenges due to more intense disasters and ambitious green power requirements. Over the past decade, utilities have faced tradeoffs between achieving carbon mitigation goals, offering reliable power access, and keeping retail prices low. Using a generator panel dataset from 2013 to 2022, we document that electricity generation from renewables declines during extreme weather events. Based on an electric utility panel dataset over the same period, we find that disasters also disrupt electricity distribution. Although utilities have made some adaptation progress, investments in green and reliable green power are associated with higher electricity prices.

Suggested Citation

  • Robert Huang & Matthew E. Kahn, 2024. "United States Electric Utility Adaptation to Natural Hazards and Green Power Mandates," Economics of Disasters and Climate Change, Springer, vol. 8(2), pages 263-282, July.
    • Handle: RePEc:spr:ediscc:v:8:y:2024:i:2:d:10.1007_s41885-024-00146-4
    DOI: 10.1007/s41885-024-00146-4
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s41885-024-00146-4
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s41885-024-00146-4?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Paul Joskow & Jean Tirole, 2007. "Reliability and competitive electricity markets," RAND Journal of Economics, RAND Corporation, vol. 38(1), pages 60-84, March.
    2. Shaun McRae, 2023. "Residential Electricity Consumption and Adaptation to Climate Change by Colombian Households," Economics of Disasters and Climate Change, Springer, vol. 7(2), pages 253-279, July.
    3. Stephen P. Holland & Matthew J. Kotchen & Erin T. Mansur & Andrew J. Yates, 2022. "Why marginal CO 2 emissions are not decreasing for US electricity: Estimates and implications for climate policy," Proceedings of the National Academy of Sciences, Proceedings of the National Academy of Sciences, vol. 119(8), pages 2116632119-, February.
    4. Simeon Hagspiel, Andreas Knaut, and Jakob Peter, 2018. "Reliability in Multi-regional Power Systems: Capacity Adequacy and the Role of Interconnectors," The Energy Journal, International Association for Energy Economics, vol. 0(Number 5).
    5. Hines, Paul & Apt, Jay & Talukdar, Sarosh, 2009. "Large blackouts in North America: Historical trends and policy implications," Energy Policy, Elsevier, vol. 37(12), pages 5249-5259, December.
    6. Fisher-Vanden, Karen & Mansur, Erin T. & Wang, Qiong (Juliana), 2015. "Electricity shortages and firm productivity: Evidence from China's industrial firms," Journal of Development Economics, Elsevier, vol. 114(C), pages 172-188.
    7. Steinbuks, J. & Foster, V., 2010. "When do firms generate? Evidence on in-house electricity supply in Africa," Energy Economics, Elsevier, vol. 32(3), pages 505-514, May.
    8. Carson, Richard T. & Novan, Kevin, 2013. "The private and social economics of bulk electricity storage," Journal of Environmental Economics and Management, Elsevier, vol. 66(3), pages 404-423.
    9. Nicholas Bloom & Christos Genakos & Ralf Martin & Raffaella Sadun, 2010. "Modern Management: Good for the Environment or Just Hot Air?," Economic Journal, Royal Economic Society, vol. 120(544), pages 551-572, May.
    10. Hunt Allcott & Allan Collard-Wexler & Stephen D. O'Connell, 2016. "How Do Electricity Shortages Affect Industry? Evidence from India," American Economic Review, American Economic Association, vol. 106(3), pages 587-624, March.
    11. James H. Stock, 2020. "Climate Change, Climate Policy, and Economic Growth," NBER Macroeconomics Annual, University of Chicago Press, vol. 34(1), pages 399-419.
    12. Frank A. Wolak, 2011. "Do Residential Customers Respond to Hourly Prices? Evidence from a Dynamic Pricing Experiment," American Economic Review, American Economic Association, vol. 101(3), pages 83-87, May.
    13. Nick Bloom & Christos Genakos & Ralf Martin & Raffaella Sadun, 2010. "In brief: Modern Management: Good for the environment or just hot air?," CentrePiece - The magazine for economic performance 303, Centre for Economic Performance, LSE.
    14. Steve Cicala, 2022. "Imperfect Markets versus Imperfect Regulation in US Electricity Generation," American Economic Review, American Economic Association, vol. 112(2), pages 409-441, February.
    15. Matthew E. Kahn, 2005. "The Death Toll from Natural Disasters: The Role of Income, Geography, and Institutions," The Review of Economics and Statistics, MIT Press, vol. 87(2), pages 271-284, May.
    16. Lucas W. Davis & Catherine Hausman & Nancy L. Rose, 2023. "Transmission Impossible? Prospects for Decarbonizing the US Grid," Journal of Economic Perspectives, American Economic Association, vol. 37(4), pages 155-180, Fall.
    17. David Ward, 2013. "The effect of weather on grid systems and the reliability of electricity supply," Climatic Change, Springer, vol. 121(1), pages 103-113, November.
    18. Alan Barreca & Karen Clay & Olivier Deschenes & Michael Greenstone & Joseph S. Shapiro, 2016. "Adapting to Climate Change: The Remarkable Decline in the US Temperature-Mortality Relationship over the Twentieth Century," Journal of Political Economy, University of Chicago Press, vol. 124(1), pages 105-159.
    19. Cole, Matthew A. & Elliott, Robert J.R. & Occhiali, Giovanni & Strobl, Eric, 2018. "Power outages and firm performance in Sub-Saharan Africa," Journal of Development Economics, Elsevier, vol. 134(C), pages 150-159.
    20. Peter Cramton & Axel Ockenfels & Steven Stoft, 2013. "Capacity Market Fundamentals," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 2).
    21. Markus Baldauf & Lorenzo Garlappi & Constantine Yannelis & José Scheinkman, 2020. "Does Climate Change Affect Real Estate Prices? Only If You Believe In It," The Review of Financial Studies, Society for Financial Studies, vol. 33(3), pages 1256-1295.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Meeks, Robyn C. & Omuraliev, Arstan & Isaev, Ruslan & Wang, Zhenxuan, 2023. "Impacts of electricity quality improvements: Experimental evidence on infrastructure investments," Journal of Environmental Economics and Management, Elsevier, vol. 120(C).
    2. Yu, Jian & Liu, Peng & Fu, Dahai & Shi, Xunpeng, 2023. "How do power shortages affect CO2 emission intensity? Firm-level evidence from China," Energy, Elsevier, vol. 282(C).
    3. Bajo-Buenestado, Raúl, 2021. "The effect of blackouts on household electrification status: Evidence from Kenya," Energy Economics, Elsevier, vol. 94(C).
    4. Edwin Teye Sosi & Philip Akrofi Atitianti, 2021. "How constraining are electricity fluctuations to Ghanaian firms’ performance?," SN Business & Economics, Springer, vol. 1(11), pages 1-23, November.
    5. Mensah, Justice Tei, 2024. "Jobs! Electricity shortages and unemployment in Africa," Journal of Development Economics, Elsevier, vol. 167(C).
    6. Keppler, Jan Horst & Quemin, Simon & Saguan, Marcelo, 2022. "Why the sustainable provision of low-carbon electricity needs hybrid markets," Energy Policy, Elsevier, vol. 171(C).
    7. Brown, David P. & Muehlenbachs, Lucija, 2023. "The Value of Electricity Reliability: Evidence from Battery Adoption," Working Papers 2023-5, University of Alberta, Department of Economics, revised 26 Jul 2024.
    8. Gregor Singer, 2024. "Complementary Inputs and Industrial Development: Can Lower Electricity Prices Improve Energy Efficiency?," CESifo Working Paper Series 10944, CESifo.
    9. Jacopo Bonan & Stefano Pareglio & Massimo Tavoni, 2014. "Access to Modern Energy: a Review of Impact Evaluations," Working Papers 2014.96, Fondazione Eni Enrico Mattei.
    10. Huang, Robert & Kahn, Matthew E., 2024. "An economic analysis of United States public transit carbon emissions dynamics," Regional Science and Urban Economics, Elsevier, vol. 107(C).
    11. Singer, Gregor, 2024. "Complementary inputs and industrial development: can lower electricity prices improve energy efficiency?," LSE Research Online Documents on Economics 122365, London School of Economics and Political Science, LSE Library.
    12. Cole, Matthew A. & Elliott, Robert J.R. & Occhiali, Giovanni & Strobl, Eric, 2018. "Power outages and firm performance in Sub-Saharan Africa," Journal of Development Economics, Elsevier, vol. 134(C), pages 150-159.
    13. Oseni, Musiliu O. & Pollitt, Michael G., 2015. "A firm-level analysis of outage loss differentials and self-generation: Evidence from African business enterprises," Energy Economics, Elsevier, vol. 52(PB), pages 277-286.
    14. Timilsina, Govinda & Steinbuks, Jevgenijs, 2021. "Economic costs of electricity load shedding in Nepal," Renewable and Sustainable Energy Reviews, Elsevier, vol. 146(C).
    15. Kenneth Lee & Edward Miguel & Catherine Wolfram, 2020. "Does Household Electrification Supercharge Economic Development?," Journal of Economic Perspectives, American Economic Association, vol. 34(1), pages 122-144, Winter.
    16. Kahn, Matthew E. & Walsh, Randall, 2015. "Cities and the Environment," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 405-465, Elsevier.
    17. Klaus Eisenack & Mathias Mier, 2019. "Peak-load pricing with different types of dispatchability," Journal of Regulatory Economics, Springer, vol. 56(2), pages 105-124, December.
    18. Sue Wing, Ian & Rose, Adam Z., 2020. "Economic consequence analysis of electric power infrastructure disruptions: General equilibrium approaches," Energy Economics, Elsevier, vol. 89(C).
    19. Perez Sebastian,Fidel & Steinbuks,Jevgenijs & Feres,Jose Gustavo & Trotter,Ian Michael, 2020. "Electricity Access and Structural Transformation : Evidence from Brazil's Electrification," Policy Research Working Paper Series 9182, The World Bank.
    20. Hashemi, Majid, 2021. "The economic value of unsupplied electricity: Evidence from Nepal," Energy Economics, Elsevier, vol. 95(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:ediscc:v:8:y:2024:i:2:d:10.1007_s41885-024-00146-4. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.