Essays in Energy and Environmental Economics

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2019

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This dissertation is comprised of three papers which examine important topics in energy and environmental economics. The first paper ("Averting expenditures and desirable goods: Consumer demand for bottled water in the presence of fracking" with T. Robert Fetter) estimates household willingness to pay to avoid consuming tap water when hydraulic fracturing is present in the area. The paper focuses on accounting for the joint production of utility inherent in bottled water. Furthermore, it introduces a novel estimation routine which accounts for household heterogeneity in a parsimonious manner, and provides evidence of its effectiveness. The empirical results of the paper show that accounting for the utility that households have for bottled water independent of fracking results in a lower bound of willingness to pay to avoid one of the primary sources of fracking impacts.

The second chapter ("Estimating Congestion Benefits of Batteries for Unobserved Networks: A Machine Learning Approach") examines the price effect of grid-scale energy storage. Policy-makers have often identified energy storage as a ``solution'' to the intermittency cost of renewables, but no previous empirical work exists to establish the magnitude of that effect, largely because the price effect of energy storage is not constant across a grid and data on grid structures are not publicly available. This paper estimates the cross-network effects of storage and uncovers the network structure relevant to calculating the total reduction in the cost of serving load.

The final chapter ("Heterogeneous Environmental and Grid Benefits from Rooftop Solar and the Costs of Inefficient Siting Decisions" with Steven Sexton, Robert Harris, and Nicholas Muller) calculates the total reduction in pollution externalities associated with a solar panel across each US zip code. Noting that the marginal plant displaced by a solar panel's generation will depend on the location and time of generation, this paper establishes the chain from panel generation to plant displaced to reduction in emissions to reduction in externalities. Results indicate that subsidies and incentives offered by many states do not coincide with the areas where solar panels generate the largest reduction in externalities.

Each of these papers has important implications for energy and environmental policy in the United States and beyond. Valuing the change in overall social welfare from a new technology (e.g. fracking, energy storage, solar) provides a vital understanding that speaks to the economic efficiency of our energy systems, and helps to provide data and intuition for policymakers who seek to maximize total social welfare. In the first paper, valuing the disamenity of fracking helps policymakers understand the optimal regulation of fracking activity. In the second, estimates of energy storage's reduction in the cost of serving load help to guide debate of future policy. And finally, a better understanding of the siting of solar helps to guide future investments in clean energy technology.

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Kirkpatrick, Aubrey Justin (2019). Essays in Energy and Environmental Economics. Dissertation, Duke University. Retrieved from https://hdl.handle.net/10161/18725.

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