Electrical engineering

Factor market

Redistribution (election)

Politics

Nonmarket forces

Engineering

Political science

Economics

Microeconomics

Natural resource economics

Renewable energy

Electricity

Wind power

Environmental science

Waste management

Fossil fuel

American Economic Journal Economic Policy

We examine how transmission congestion alters the environmental benefits provided by renewable generation. Using hourly data from the Texas and midcontinent electricity markets, we find that relaxing transmission constraints between the wind-rich areas and the demand centers of the respective markets conservatively increases the nonmarket value of wind by 30 percent for Texas and 17 percent for midcontinent markets. Much of this increase in the nonmarket value arises from a redistribution in where air quality improvements occur—when transmission is not constrained, wind offsets much more pollution from fossil fuel units located near highly populated demand centers. (JEL L94, Q42, Q51, Q53)

Emissions, Transmission, and the Environmental Value of Renewable Energy