The Price of Wind: An Empirical Analysis of the Relationship between Wind Energy and Electricity Price across the Residential, Commercial, and Industrial Sectors
This paper quantifies the long-term impact of wind energy development on electricity prices across the residential, commercial, and industrial sectors in the United States. Our data set is made up of state level panel data from 2000 through 2018. This time period covers the vast majority of total wi...
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| Format: | Article |
| Language: | English |
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MDPI AG
2021-06-01
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| Series: | Energies |
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| Online Access: | https://www.mdpi.com/1996-1073/14/12/3363 |
| _version_ | 1797530967704862720 |
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| author | John Dorrell Keunjae Lee |
| author_facet | John Dorrell Keunjae Lee |
| author_sort | John Dorrell |
| collection | DOAJ |
| description | This paper quantifies the long-term impact of wind energy development on electricity prices across the residential, commercial, and industrial sectors in the United States. Our data set is made up of state level panel data from 2000 through 2018. This time period covers the vast majority of total wind energy capacity installed in the history of the USA. Our econometric model accounts for the primary factors that influence electricity prices, incorporating both fixed effects and general method of moments in order to more precisely isolate the effect of wind energy. The empirical results conclude that wind energy is positively and significantly related to electricity prices across all sectors, as indicated by the higher average electricity prices in states with higher percentages of wind energy. The price increase is largest in the industrial sector, followed by commercial, then residential. Wind turbine technology has become significantly more efficient, but the technical gains have been offset by the increased indirect costs of incorporating wind energy into the grid. Transmission and balancing costs have increased the final price to consumers. Our results highlight the need to view wind energy development from a more holistic perspective that accounts for structural and systemic costs. This will ensure the continued growth of wind energy. These results provide relevant insight to help wind energy developers, policy makers, and utility companies build a more sustainable energy future. |
| first_indexed | 2024-03-10T10:37:29Z |
| format | Article |
| id | doaj.art-cdcc53aed9ce42ddaa24fd1b410e6d23 |
| institution | Directory Open Access Journal |
| issn | 1996-1073 |
| language | English |
| last_indexed | 2024-03-10T10:37:29Z |
| publishDate | 2021-06-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | Energies |
| spelling | doaj.art-cdcc53aed9ce42ddaa24fd1b410e6d232023-11-21T23:13:00ZengMDPI AGEnergies1996-10732021-06-011412336310.3390/en14123363The Price of Wind: An Empirical Analysis of the Relationship between Wind Energy and Electricity Price across the Residential, Commercial, and Industrial SectorsJohn Dorrell0Keunjae Lee1Economics Department, Pusan National University, Jangjeon-dong, Geumjeong-gu, Busan 43241, KoreaEconomics Department, Pusan National University, Jangjeon-dong, Geumjeong-gu, Busan 43241, KoreaThis paper quantifies the long-term impact of wind energy development on electricity prices across the residential, commercial, and industrial sectors in the United States. Our data set is made up of state level panel data from 2000 through 2018. This time period covers the vast majority of total wind energy capacity installed in the history of the USA. Our econometric model accounts for the primary factors that influence electricity prices, incorporating both fixed effects and general method of moments in order to more precisely isolate the effect of wind energy. The empirical results conclude that wind energy is positively and significantly related to electricity prices across all sectors, as indicated by the higher average electricity prices in states with higher percentages of wind energy. The price increase is largest in the industrial sector, followed by commercial, then residential. Wind turbine technology has become significantly more efficient, but the technical gains have been offset by the increased indirect costs of incorporating wind energy into the grid. Transmission and balancing costs have increased the final price to consumers. Our results highlight the need to view wind energy development from a more holistic perspective that accounts for structural and systemic costs. This will ensure the continued growth of wind energy. These results provide relevant insight to help wind energy developers, policy makers, and utility companies build a more sustainable energy future.https://www.mdpi.com/1996-1073/14/12/3363windenergyeconomicselectricitypriceresidential |
| spellingShingle | John Dorrell Keunjae Lee The Price of Wind: An Empirical Analysis of the Relationship between Wind Energy and Electricity Price across the Residential, Commercial, and Industrial Sectors Energies wind energy economics electricity price residential |
| title | The Price of Wind: An Empirical Analysis of the Relationship between Wind Energy and Electricity Price across the Residential, Commercial, and Industrial Sectors |
| title_full | The Price of Wind: An Empirical Analysis of the Relationship between Wind Energy and Electricity Price across the Residential, Commercial, and Industrial Sectors |
| title_fullStr | The Price of Wind: An Empirical Analysis of the Relationship between Wind Energy and Electricity Price across the Residential, Commercial, and Industrial Sectors |
| title_full_unstemmed | The Price of Wind: An Empirical Analysis of the Relationship between Wind Energy and Electricity Price across the Residential, Commercial, and Industrial Sectors |
| title_short | The Price of Wind: An Empirical Analysis of the Relationship between Wind Energy and Electricity Price across the Residential, Commercial, and Industrial Sectors |
| title_sort | price of wind an empirical analysis of the relationship between wind energy and electricity price across the residential commercial and industrial sectors |
| topic | wind energy economics electricity price residential |
| url | https://www.mdpi.com/1996-1073/14/12/3363 |
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