Working Paper: NBER ID: w17086
Authors: Gautam Gowrisankaran; Stanley S. Reynolds; Mario Samano
Abstract: A key problem with solar energy is intermittency: solar generators only produce when the sun is shining. This adds to social costs and also requires electricity system operators to reoptimize key decisions with large-scale renewables. 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 CO2, we find social costs of $138.4/MWh for 20% solar generation, of which unforecastable intermittency accounts for $6.1 and intermittency overall for $46. With solar installation costs of $1.52/W and CO2 social costs of $39/ton, 20% solar would be welfare neutral.
Keywords: renewable energy; solar energy; social costs; intermittency
JEL Codes: Q2; Q4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| solar generation variability (Q42) | social costs (J32) |
| fixed costs of solar (Q49) | social costs (J32) |
| unforecastable intermittency (D84) | social costs (J32) |
| renewable output distributions (Q21) | total welfare (D69) |