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Emissions, Transmission, and the Environmental Value of Renewable Energy

Harrison Fell, Daniel Kaffine and Kevin Novan

American Economic Journal: Economic Policy, 2021, vol. 13, issue 2, 241-72

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.

JEL-codes: L94 Q42 Q51 Q53 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1257/pol.20190258

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