LAPSE:2023.32811
Published Article
LAPSE:2023.32811
The Price of Wind: An Empirical Analysis of the Relationship between Wind Energy and Electricity Price across the Residential, Commercial, and Industrial Sectors
John Dorrell, Keunjae Lee
April 20, 2023
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.
Keywords
commercial, economics, electricity, Energy, industrial, price, residential, Wind
Suggested Citation
Dorrell J, Lee K. The Price of Wind: An Empirical Analysis of the Relationship between Wind Energy and Electricity Price across the Residential, Commercial, and Industrial Sectors. (2023). LAPSE:2023.32811
Author Affiliations
Dorrell J: Economics Department, Pusan National University, Jangjeon-dong, Geumjeong-gu, Busan 43241, Korea
Lee K: Economics Department, Pusan National University, Jangjeon-dong, Geumjeong-gu, Busan 43241, Korea
Journal Name
Energies
Volume
14
Issue
12
First Page
3363
Year
2021
Publication Date
2021-06-08
Published Version
ISSN
1996-1073
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Original Submission
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PII: en14123363, Publication Type: Journal Article
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LAPSE:2023.32811
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doi:10.3390/en14123363
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Apr 20, 2023
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