Research

Dissertation: Essays on the Economics of Grid Modernization in the United States

Chapter 1: Public Support for Community Microgrids, Jesse Kaczmarski

2022 Energy Economics 115 (November): 106344. https://doi.org/10.1016/j.eneco.2022.106344

Abstract: Utility-owned community microgrids can provide communities with decentralized grid access to distributed energy resources and improve reliability and resiliency. However, the feasibility of installing microgrids requires rigorous cost-benefit analysis, which should incorporate social values. Currently, the gap in our understanding of ratepayers' preferences for community microgrid services leaves stakeholders guessing. Using a survey-based contingent valuation method, with a referendum-style elicitation format, this paper provides evidence of public support for community microgrid installations in Arizona, Colorado, New Mexico, and Utah (the Four Corners). The Four Corners region is unique in its potential for renewable electricity capacity as well as heterogeneous state policy objectives regarding the transition to clean energy. A split-sample survey of 4783 Four Corner's ratepayers resulted in between 40 and 45% of respondents voting to support a community microgrid installation (after controlling for hypothetical bias) with a median willingness-to-pay (WTP) of $25.44 (divided among 24 months) if the ratepayer received direct benefits, or $13.92 if they received indirect benefits. Ratepayers in Utah were willing to pay the most relative to the other states. Results highlight the impacts of ideological, institutional, and socioeconomic factors on public support and WTP.

Chapter 2: The Marginal Generation and Emissions Impacts of Hydropower: Evidence from the Colorado River Storage Project, Jesse Kaczmarski and Benjamin Jones

Working Paper (Coming Soon)

Abstract: As electric grids continue to modernize through infrastructure improvements and increased intermittent capacity, hydropower has an important role as a source of low-emission electricity that supplies both baseload and peaking power. In many areas of the world, hydropower production is under threat of becoming less flexible and more constrained due to regulatory constraints, ongoing drought, and changing weather patterns associated with climate change. Hydropower has historically been known to offset dirtier and more expensive fossil fuels, but the scope and magnitude of these offsets remain largely unknown. To-date, there has been no work that directly examines the generation, emissions, and air pollution effects of replacing hydropower with fossil fuel power generation. In this study, we provide the first evidence of forecastable hydropower generation and pollutant (CO2, SO2, and NO2) offsets and ambient ozone reductions at the hourly level for a public non-profit power wholesaler in the northern part of the US state of Colorado. Hourly generations and emissions data are employed in a high-dimensional fixed effects model. We find the marginal effect of an additional unit (MWh) of hydropower is a reduction of all fossil fuel generation by 0.21 MWh. We also quantify the marginal effects of wind and solar generation. We then estimate the marginal effect of an additional unit of hydropower on levels of CO2, SO2, and NOX from the study region’s main generating facility, finding that hydropower is associated with reductions of 0.26 tons, 0.18 pounds, and 0.28 pounds respectively. Finally, we use ambient ozone levels from monitoring stations in the study region and find that when accounting for dispersion, the marginal effect of an additional unit of hydropower is a reduction of ambient ozone levels by 0.0010 parts per million. We then approximate the spatial impacts of these findings on health outcomes using concentration response and health impact functions derived from the epidemiological literature.


Keywords: Hydropower; generation offsets; emissions offsets; air pollution; fossil fuels; Colorado River

JEL Codes: Q41, Q42, Q52

Chapter 3: Estimating the Marginal Effects of Exogenous Renewable Generation on Battery Dispatch: Evidence from the California Independent System Operator, Jesse Kaczmarski

Working Paper

Abstract: Given the recent rise in utility-scale battery storage in California, this study presents the first empirical evidence for how batteries respond to solar and wind availability. I employ hourly fuel mix data from the California Independent System Operator from 2019 to 2021, along with a high-dimensional fixed effects model, to estimate the marginal effect of exogenous renewable availability on battery dispatch. I find that as battery capacity increases throughout the sample, battery dispatch patterns do indeed follow solar and wind availability, which satisfies arbitrage and policy objectives within California. I also show evidence of a non-linear relationship between battery charging and exogenous renewable generation, where charging only occurs at the highest quantiles of availability. Finally, I note that resource availability explains a minor amount of variation in battery dispatch patterns, for which I also discuss potential mechanisms and policy implications.


Keywords: Storage, battery, renewables, wholesale energy markets

Committee on Studies: Benjamin Jones (Chair), Janie Chermak, Robert Berrens, and Seth Blumsack (Penn State University)

Peer Reviewed

Kaczmarski, Jesse I. 2022. “Public Support for Community Microgrid Services.” Energy Economics 115 (November): 106344. https://doi.org/10.1016/j.eneco.2022.106344.

Abstract

Utility-owned community microgrids can provide communities with decentralized grid access to distributed energy resources and improve reliability and resiliency. However, the feasibility of installing microgrids requires rigorous cost-benefit analysis, which should incorporate social values. Currently, the gap in our understanding of ratepayers' preferences for community microgrid services leaves stakeholders guessing. Using a survey-based contingent valuation method, with a referendum-style elicitation format, this paper provides evidence of public support for community microgrid installations in Arizona, Colorado, New Mexico, and Utah (the Four Corners). The Four Corners region is unique in its potential for renewable electricity capacity as well as heterogeneous state policy objectives regarding the transition to clean energy. A split-sample survey of 4783 Four Corner's ratepayers resulted in between 40 and 45% of respondents voting to support a community microgrid installation (after controlling for hypothetical bias) with a median willingness-to-pay (WTP) of $25.44 (divided among 24 months) if the ratepayer received direct benefits, or $13.92 if they received indirect benefits. Ratepayers in Utah were willing to pay the most relative to the other states. Results highlight the impacts of ideological, institutional, and socioeconomic factors on public support and WTP.

Kaczmarski, Jesse, Benjamin Jones, and Janie Chermak. 2022. “Determinants of Demand Response Program Participation: Contingent Valuation Evidence from a Smart Thermostat Program.” Energies 15 (2): 590. https://doi.org/10.3390/en15020590.

Abstract

As renewable electricity generation continues to increase in the United States (US), considerable effort goes into matching heterogeneous supply to demand at a subhour time-step. As a result, some electric providers offer incentive-based programs for residential consumers that aim to reduce electric demand during high-demand periods. There is little research into determinants of consumer response to incentive-based programs beyond typical sociodemographic characteristics. To add to this body of literature, this paper presents the findings of a dichotomous choice contingent valuation (CV) survey targeting US ratepayers’ participation in a direct-load-control scheme utilizing a smart thermostat designed to reallocate consumer electricity demand on summer days when grid stress is high. Our results show approximately 50% of respondents are willing to participate at a median willingness-to-accept (WTA) figure of USD 9.50 (95% CI: 3.74, 15.25) per month that lasts for one summer (June through August)—or slightly less than USD 30 per annum. Participation is significantly affected by a respondent’s attitudes and preferences surrounding various environmental and institutional perspectives, but not by sociodemographic characteristics. These findings suggest utilities designing direct-load-control programs may improve participation by designing incentives specific to customers’ attitudes and preferences.

Kaczmarski, Jesse, and Jungho Baek. 2018. “On the Asymmetric Effects of Oil Price Changes on Alaska Oil Tax Revenue.” Energy Sources, Part B: Economics, Planning, and Policy 13 (1): 60–65. https://doi.org/10.1080/15567249.2017.1403500.

Abstract

Alaska depends on oil tax revenue for more than 90% of the state budget. In this article, we apply the nonlinear autoregressive distributed lag (ARDL) approach of to test whether the effect of changes in oil prices on Alaska’s oil revenues is symmetric or asymmetric. The results show that oil prices have an asymmetric effect on Alaska’s oil revenues in the long run, though not in the short run. Additionally, declines in oil prices have a more substantial long-run effect than increases in oil prices.