Heterogeneous Environmental and Grid Benefits from Rooftop Solar and the Costs of Inefficient Siting Decisions

50 Pages Posted: 12 Nov 2018

See all articles by Steven Sexton

Steven Sexton

Duke University Sanford School of Public Policy

A. Justin Kirkpatrick

Duke University

Robert Harris

Duke University

Nicholas Z. Muller

Carnegie Mellon University - David A. Tepper School of Business

Date Written: November 2018

Abstract

Federal and state policies in the U.S. subsidize electricity generation from 1.4 million rooftop solar arrays because of pollution avoidance benefits and grid congestion relief. Yet because these benefits vary across the U.S. according to solar irradiance, technologies of electricity generators, and grid characteristics, the value of these benefits, and, consequently, the optimal subsidy, are largely unknown. Policy, therefore, is unlikely to have induced efficient solar investments. This paper (1) provides the first systematic, theoretically consistent, and empirically valid estimates of pollution damages avoidable by solar capacity in each U.S. zip code, (2) relates these external benefits to subsidy levels in each U.S. state, and (3) estimates the share of these benefits that spillover to other states. It also measures the energy value of capacity across the U.S. and the value of transmission congestion relief in California. Environmental benefits are shown to vary considerably across the U.S., and to largely spillover to neighboring states. Subsidy levels are essentially uncorrelated with environmental benefits contributing to installed capacity that sacrifices approximately $1 billion per year in environmental benefits. Energy value is estimated to vary less than environmental benefits, while California rooftop solar is shown to generate no congestion relief.

Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Suggested Citation

Sexton, Steven and Kirkpatrick, A. Justin and Harris, Robert and Muller, Nicholas Z., Heterogeneous Environmental and Grid Benefits from Rooftop Solar and the Costs of Inefficient Siting Decisions (November 2018). NBER Working Paper No. w25241. Available at SSRN: https://ssrn.com/abstract=3282905

Steven Sexton (Contact Author)

Duke University Sanford School of Public Policy ( email )

201 Science Drive
Box 90312
Durham, NC 27708-0239
United States

A. Justin Kirkpatrick

Duke University

100 Fuqua Drive
Durham, NC 27708-0204
United States

Robert Harris

Duke University ( email )

100 Fuqua Drive
Durham, NC 27708-0204
United States

Nicholas Z. Muller

Carnegie Mellon University - David A. Tepper School of Business ( email )

5000 Forbes Avenue
Pittsburgh, PA 15213-3890
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
8
Abstract Views
149
PlumX Metrics