NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Intermittency and the Value of Renewable Energy

Gautam Gowrisankaran, Stanley S. Reynolds, Mario Samano

NBER Working Paper No. 17086
Issued in May 2011
NBER Program(s):   EEE   IO   PR

This paper develops an empirical approach to estimate the equilibrium value of intermittent renewable energy. We model an electricity system operator who optimizes the amount of generation capacity, operating reserves, and demand curtailment potentially in the presence of large-scale solar facilities. We use generator characteristics, solar output, demand and weather forecast data to estimate parameters for southeastern Arizona. The deadweight loss of a 20% solar mandate is 79% of its $184/MWh average cost. Unforecastable intermittency accounts for $12.5/MWh. At a $21/ton social cost of CO2 this mandate is welfare neutral if solar capacity costs decrease from $5/W to $1.38/W.

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This paper was revised on December 9, 2011

Acknowledgments

Machine-readable bibliographic record - MARC, RIS, BibTeX

 
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