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Lower electricity prices and greenhouse gas emissions due to rooftop solar: empirical results for Massachusetts

Robert Kaufmann () and Devina Vaid

Energy Policy, 2016, vol. 93, issue C, 345-352

Abstract: Monthly and hourly correlations among photovoltaic (PV) capacity utilization, electricity prices, electricity consumption, and the thermal efficiency of power plants in Massachusetts reduce electricity prices and carbon emissions beyond average calculations. PV utilization rates are highest when the thermal efficiencies of natural gas fired power plants are lowest, which reduces emissions of CO2 and CH4 by 0.3% relative to the annual average emission rate. There is a positive correlation between PV utilization rates and electricity prices, which raises the implied price of PV electricity by up to 10% relative to the annual average price, such that the average MWh reduces electricity prices by $0.26–$1.86 per MWh. These price reductions save Massachusetts rate-payers $184 million between 2010 and 2012. The current and net present values of these savings are greater than the cost of solar renewable energy credits which is the policy instrument that is used to accelerate the installation of PV capacity. Together, these results suggest that rooftop PV is an economically viable source of power in Massachusetts even though it has not reached socket parity.

Keywords: Electricity prices; PV generation; Carbon emissions; Renewable energy credits (search for similar items in EconPapers)
Date: 2016
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Handle: RePEc:eee:enepol:v:93:y:2016:i:c:p:345-352