Emissions, Transmission, and the Environmental Value of Renewable Energy

We examine how transmission congestion alters the environmental benefits provided by renewable generation. Using hourly data from Texas and midcontinent electricity markets, we find that relaxing constraints between wind-rich areas demand centers of respective markets conservatively increases nonmarket value wind 30 percent for 17 markets. Much this increase in arises a redistribution where air quality improvements occur—when is not constrained, offsets much more pollution fossil fuel units located near highly populated centers. (JEL L94, Q42, Q51, Q53)