Environmental and Energy Economics.

• Position: Program and Working Group Meetings

NBER's Program on Environmental and Energy Economics met at Stanford University on February 8. Program Director Don Fullerton, University of Texas, and Catherine Wolfram, NBER and University of California, Berkeley, organized this agenda:

Severin Borenstein, University of California, Berkeley and NBER, "The Market Value and Cost of Solar Photovoltaic Electricity Production"

Discussant: William Pizer, Resources for the Future

Stephen P. Holland, University of North Carolina at Greensboro; Christopher R. Knittel, University of California, Davis and NBER; and Jonathan E. Hughes, University of California, Davis, "Greenhouse Gas Reductions under Low Carbon Fuel Standards?" (NBER Working Paper No. 13266)

Discussant: Kenneth Small, University of California, Irvine

Matthew J. Kotchen, University of California, Santa Barbara and NBER, and Laura E. Grant, University of California, Santa Barbara, "Does Daylight Saving Time Save Energy? Evidence from a Natural Experiment in Indiana"

Discussant: Matthew Kahn, University of California, Los Angeles and NBER

The high cost of power from solar photovoltaic (PV) panels has been a major deterrent to the technology's market penetration. Proponents have argued, however, that typical analyses overlook many of the benefits of solar PV. Some of those benefits are in the realm of environmental and security externalities, but others occur within the electricity markets. Borenstein attempts to do a more complete market valuation of solar PV. He incorporates the fact that power from solar PV panels is generated disproportionately at times when electricity is most valuable because of high demand and increased line losses. He finds that the degree to which the timing of solar PV production enhances its value depends very much on the extent to which wholesale prices peak with demand, which in turn depends on the proportion of reserve capacity held in the system. In a typical U.S. system with substantial excess capacity, the favorable timing of solar PV production increases its value by as much as 20 percent, but if the system were run with more reliance on price-responsive demand and peaking prices, the premium value of solar PV would be in the 30-50 percent range. Solar PV also may have enhanced value within an electrical grid, because the power is produced at the location of the end-user and therefore can reduce the costs of transmission and distribution investments. This analysis, however, suggests that actual...