The economic impacts of high wind penetration scenarios in the United States

Stuart M. Cohen and Justin Caron

Energy Economics, 2018, vol. 76, issue C, 558-573

Abstract: The U.S. electric sector is experiencing rapid increases in renewable generation with an expectation of continued growth. We examine the impacts of increased wind electricity on the U.S. economy using a hybrid model that links a detailed electric sector model (the National Renewable Energy Laboratory's Regional Energy Deployment System [ReEDS]) with a computable general equilibrium model of the U.S. economy (the Massachusetts Institute of Technology's U.S. Regional Energy Policy [USREP] model). Increasing wind capacity displaces fossil fuels for electricity generation, which depresses fossil fuel prices and reduces economy-wide CO2 emissions. Competitive wind deployment in the reference scenario achieves these outcomes with lower electricity prices than a scenario with wind capacity fixed at 2016 levels. Lower fossil fuel and electricity prices benefit low-income households, but the dominant economic impacts are driven by increased electric sector investment and capital returns, which primarily benefit those with higher incomes. Overall, cost-competitive wind provides benefits to the U.S. economy that are initially low but rise beyond 2030 to achieve cumulative welfare and GDP improvements of $110 and $111 billion through 2050.

Keywords: Electricity; Wind; General equilibrium; Capacity expansion; Welfare; Renewables; Distributional effects (search for similar items in EconPapers)
JEL-codes: O13 O21 O51 P18 Q42 Q43 Q47 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:76:y:2018:i:c:p:558-573

DOI: 10.1016/j.eneco.2018.10.023

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