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/lp/university-of-chicago-press/setting-with-the-sun-the-impacts-of-renewable-energy-on-conventional-MVsB1TqPof
- Publisher
- University of Chicago Press
- Copyright
- © 2021 by The Association of Environmental and Resource Economists. All rights reserved.
- ISSN
- 2333-5955
- eISSN
- 2333-5963
- DOI
- 10.1086/713249
- Publisher site
- See Article on Publisher Site
Abstract
Policies supporting investment in renewable electricity have been a cornerstone of climate policy in many parts of the world. While previous empirical work explores the economic and environmental impacts of renewable production, the focus has been on the short-run impacts of expanding renewable supply. In this paper, we shed light on the potential longer-run impacts of renewable expansions. Focusing on California’s electricity market, we estimate how wholesale electricity prices have responded to a dramatic increase in utility-scale solar capacity. While an overall decline in daily average prices can be attributed to the solar expansion, this reduction in the average price masks a substantial decrease in midday prices combined with an increase in shoulder hour prices. These results imply that short-term power markets are responding to the renewable expansion in a fashion that could sustain more flexible conventional generation, while undermining the economic viability of traditional baseload generation technologies.
Journal
Journal of the Association of Environmental and Resource Economists – University of Chicago Press
Published: Jul 1, 2021