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The Economic Impacts of High Wind Penetration Scenarios in the United States

Journal Article · · Energy Economics
 [1];  [2]
  1. National Renewable Energy Lab. (NREL), Golden, CO (United States)
  2. Massachusetts Inst. of Technology (MIT), Cambridge, MA (United States); HEC Montreal, QC (Canada)
+ Show Author Affiliations
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. Prescribing additional wind deployment (meeting 35% of demand by 2050) increases post-2030 electricity prices but not more so than keeping wind capacity fixed at 2016 levels. The negative effect of higher prices on welfare, however, is outweighed by higher returns from the additional wind investment. While these changes favor higher income classes, we find economy-wide benefits through 2040. These benefits diminish by 2050, but the cumulative additional gains through 2050, beyond the reference case, are $192 billion in welfare and $150 billion in GDP.
Research Organization:
National Renewable Energy Laboratory (NREL), Golden, CO (United States)
Sponsoring Organization:
USDOE Office of Energy Efficiency and Renewable Energy (EERE)
Grant/Contract Number:
AC36-08GO28308
OSTI ID:
1484595
Alternate ID(s):
OSTI ID: 1636163
OSTI ID: 23104335
Report Number(s):
NREL/JA--6A20-70144
Journal Information:
Energy Economics, Journal Name: Energy Economics Journal Issue: C Vol. 76; ISSN 0140-9883
Publisher:
ElsevierCopyright Statement
Country of Publication:
United States
Language:
English

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Figures / Tables (18)

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Related Subjects

17 WIND ENERGY
29 ENERGY PLANNING, POLICY, AND ECONOMY
capacity expansion
distributional effects
electricity
general equilibrium
renewables
welfare
wind