Do U.S. solar energy policies achieve their aims? It depends on where arrays are located, says a new working paper by researchers from Duke and Carnegie Mellon universities, to be featured soon in the NBER Digest.
Solar energy policies usually seek to avoid environmental impacts of pollution generated by fossil fuel plants and to ease congestion on the electric grid. But as the new study documents, the actual benefits of rooftop solar arrays can vary tremendously by location.
The study suggests that rooftop solar arrays can achieve greater benefits in particular regions—specifically, the Midwest and Mid-Atlantic. Total benefits of solar generation are least in the West and particularly the West Coast, where about two-thirds of systems are located.
“If a rooftop solar array is displacing a coal plant as a fuel source, its environmental benefits are far greater than if it’s replacing natural gas,” said Steven E. Sexton, a professor at Duke’s Sanford School of Public Policy and faculty fellow with the Duke University Energy Initiative.
Benefits also vary among regions because marginal costs of electricity supply vary over space and time, and because the locations of rooftop solar arrays yield varying degrees of congestion relief to the electricity grid. In California, nearly two-thirds of the state’s 900,000 arrays are located upstream from transmission bottlenecks, so they actually contribute to congestion.
In addition, researchers found that more than 85 percent of environmental benefits from rooftop solar arrays spill over to neighboring states—an important consideration for state policymakers.
Researchers also provide monetized estimates for avoided environmental damages in each of 30,105 U.S. ZIP codes—along with combined values of state and federal subsidies for solar energy in those areas. The authors say their study presents the first systematic, theoretically consistent, and empirically valid estimate of variation of environmental benefits of solar capacity in different locations.
On average, the discounted stream of subsidies to a typical array exceeds its environmental benefits by only a few hundred dollars. But the study reveals that in some U.S. locations, panels are subsidized as much as $25,000 in excess of environmental benefits over their lifetime, while other panels provide up to $10,000 more in environmental benefits than is spent on subsidies.
The study does not conclude rooftop solar arrays are ineffective, Sexton said.
“The takeaway here is that solar arrays are better investments in some locations than in others,” he noted. “Policymakers can work toward environmental goals and relieve grid congestion much more efficiently when policy design takes location differences into account.”
Sexton coauthored the paper with Duke doctoral candidates A. Justin Kirkpatrick and Robert Harris and Carnegie Mellon professor Nicholas Z. Muller.
Kirkpatrick and Harris, both Energy Initiative PhD Student Fellows, are pursuing doctoral degrees through the University Program in Environmental Policy, a collaboration between the Nicholas School of the Environment and Sanford School of Public Policy at Duke. Kirkpatrick is also a National Bureau of Economic Research (NBER) Pre-Doctoral Fellow in Energy Economics