Intermittency and the Value of Renewable Energy

Gautam Gowrisankaran, Stanley Reynolds and Mario Samano

Journal of Political Economy, 2016, vol. 124, issue 4, 1187 - 1234

Abstract: A key problem with solar energy is intermittency: solar generators produce only when the sun is shining, adding to social costs and requiring electricity system operators to reoptimize key decisions. We develop a method to quantify the economic value of large-scale renewable energy. We estimate the model for southeastern Arizona. Not accounting for offset carbon dioxide, we find social costs of $138.40 per megawatt hour for 20 percent solar generation, of which unforecastable intermittency accounts for $6.10 and intermittency overall for $46.00. With solar installation costs of $1.52 per watt and carbon dioxide social costs of $39.00 per ton, 20 percent solar would be welfare neutral.

Date: 2016
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Working Paper: Intermittency and the Value of Renewable Energy (2011)
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