Supply Curves for Conserved Electricity

Resources for the Future Discussion Paper No. 11-11

25 Pages Posted: 13 Apr 2011

See all articles by Anthony C. Paul

Anthony C. Paul

Resources for the Future

Karen L. Palmer

Resources for the Future

Matt Woerman

University of Massachusetts Amherst

Date Written: April 7, 2011

Abstract

In this paper, we introduce a new top-down approach to modeling the effects of publicly financed energy-efficiency programs on electricity consumption and carbon dioxide emissions. The approach draws on a partial-adjustment econometric model of electricity demand and represents the results of a reverse auction for electricity savings from different levels of public investment. The model is calibrated to recent estimates of the cost-effectiveness of rate payer–funded efficiency programs at reducing electricity consumption. The results suggest that supply curves for conserved electricity are upward sloping, convex, and dependent on policy design and electricity prices. Under the scenarios modeled, electricity savings of between 1 and 3 percent are achievable at a marginal cost of $50 per megawatt hour (MWh) and a corresponding average cost of $25–$35/MWh.

Keywords: energy efficiency, climate change

JEL Classification: Q41, Q48, Q58

Suggested Citation

Paul, Anthony C. and Palmer, Karen and Woerman, Matt, Supply Curves for Conserved Electricity (April 7, 2011). Resources for the Future Discussion Paper No. 11-11, Available at SSRN: https://ssrn.com/abstract=1808105 or http://dx.doi.org/10.2139/ssrn.1808105

Anthony C. Paul (Contact Author)

Resources for the Future ( email )

1616 P Street, NW
Washington, DC 20036
United States

Karen Palmer

Resources for the Future ( email )

1616 P Street, NW
Washington, DC 20036
United States

Matt Woerman

University of Massachusetts Amherst ( email )

Amherst, MA
United States

HOME PAGE: http://https://sites.google.com/site/mattwoerman/

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