Wiring America: The Short- and Long-Run Effects of Electricity Grid Expansion
Practice Job Talk
Agricultural & Applied Economics
University of Wisconsin - Madison
Wednesday, September 28, 2022
12:00 pm-1:15 pm
Taylor-Hibbard Seminar Room (Rm103)
Expanding the power grid is a key factor in achieving de-carbonization and fully utilizing the benefits of renewable energy. This paper examines the impact of large-scale grid expansion on price-cost markups and emissions from fossil fuel generators in the short run and wind investment in the long run. I focus on the rollout of a grid expansion project that linked windy areas in west Texas to population centers in the east. Results suggest moderate declines in markups and emissions, with total annual benefits of roughly $285 million. Counties that received investment in transmission infrastructure saw higher wind capacity in the long run, avoiding $271 million worth of carbon emissions in 2019. These findings highlight the potential to unlock large economic benefits from transmission expansion across the US.