The economic geography of variable renewable energy and impacts of trade formulations for renewable mandates

John Bistline, Nidhi Santen and David Young

Renewable and Sustainable Energy Reviews, 2019, vol. 106, issue C, 79-96

Abstract: This paper examines electricity market responses to flexibility provisions in prospective renewable energy mandates and the geographical incidence of impacts. Using an integrated model of electric sector investments and operations with detailed spatial and temporal resolutions, the analysis demonstrates how renewable mandate trade formulations for electricity and renewable energy certificates can materially impact power sector outcomes like capacity planning decisions, compliance costs, CO2 emissions, and the regional distribution of renewable development. There are substantial welfare gains, up to $84 billion in present value terms through 2050, from inter-regional electricity and permit trade (and costs of market fragmentation), but the degree and direction of impact depend on region-specific considerations. Allowing permit trade encourages greater deployment of wind and solar in regions with favorable investment environments and resources, but renewable capacity additions are appreciable in all regions since diminishing marginal returns and transmission constraints limit the benefits of overdevelopment in any single region. Model results suggest that regions will likely find it beneficial to generate at least half of their renewable mandate compliance obligations through in-state resources and that most of the economic benefits from inter-regional REC exchange can be captured with a relatively modest amount of trading flexibility. Trade flexibility is shown to have minimal impacts on CO2 emissions leakage nationally.

Keywords: F18; L94; Q28; Q42; Q48; Variable renewable energy; Trade; Market integration; Policy flexibility; Multiregional models; Spatial economics; Renewable energy certificates (search for similar items in EconPapers)
Date: 2019
References: Add references at CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1364032119301194
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:rensus:v:106:y:2019:i:c:p:79-96

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/journaldescription.cws_home/600126/bibliographic
http://www.elsevier. ... 600126/bibliographic

DOI: 10.1016/j.rser.2019.02.026

Access Statistics for this article

Renewable and Sustainable Energy Reviews is currently edited by L. Kazmerski

More articles in Renewable and Sustainable Energy Reviews from Elsevier
Bibliographic data for series maintained by Catherine Liu ().