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Products: Roberts, Michael

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Efficient Design of Net Metering Agreements in Hawaii and Beyond

In Hawaii, like most U.S. states, households installing rooftop solar photovoltaic (PV) systems receive special pricing under net-metering agreements. These agreements allow households with rooftop solar to buy and sell electricity at the retail rate, effectively using the larger grid to store surplus generation from their panels during sunny times and return it when the sun isn’t shining. If a household generates more electricity than it consumes over the course of a month, it obtains a credit that rolls over for use in future months. Net generation supplied to the grid in excess of that consumed over the course of a full year is forfeited to the utility. 

Project Report

Balancing Opportunities and Costs in Hawaii's Increasingly Green Grid

Hawaii’s tourism-dependent economy and oil-fired power plants make it the most oil dependent state in the United States. It also has the nation’s highest electricity prices, often between 3 and 4 times the national average over the last decade. These high prices, the state’s sunny and windy climate that make it amenable to increasingly economical renewable energy, plus a relatively progressive political culture have pushed the state to adopt an ambitious goal of being 100 percent renewable by 2045. Focusing mainly on the state’s largest grid on Oahu, where most people live, we discuss the cost structure of the current electricity system, the potential benefits and challenges of growing the share of renewable energy, and make a few policy suggestions. In particular, we argue that all homes and businesses should be given an opportunity to buy and sell electricity at the marginal cost of generation. Variable pricing could greatly reduce the cost of renewable energy, and perhaps seed development of Hawaii as a technology center focused on batteries and smart machines that can help shift electricity demand to align with the variable supply of solar and wind energy.

Working Paper

Do Energy Eciency Standards Hurt Consumers? Evidence from Household Appliance Sales

We examine the effect of energy efficiency standards on the clothes washers market using a constant-quality price index constructed from same-model price changes for a significant majority of clothes washer models sold in the United States between 2001 and 2011. We find constant-quality prices fell over time, while quality increased, particularly around times energy standards changed. We estimate total welfare changes by assuming the difference between average price and constant-quality price indicates average quality. Further examination shows product entry and exit are associated with changes federal standard for energy efficiency. With policy changes implicitly coordinating entry and exit, average vintage sharply falls when standards change. Controlling for individual model and time effects, we find that lower average vintage is associated with more rapidly falling prices, an effect we attribute to increased competition. We also find a strong relationship between clothes washer prices and average vintage of the same manufacturer, which indicates cannibalism explains much of the declining price of clothes washers over time. We apply the same methodology to other appliances (clothes dryer, room air conditioners and refrigerators) which did not experience simultaneous efficiency standard changes between 2001 and 2011. We see the same cannibalism in the market for clothes dryers, but not for room air conditioners or refrigerators. We also find notable improvements both in the characteristics of clothes washers that directly improve energy efficiency and those that promote convenience and space-saving. Energy efficiency standards appear to facilitate more rapid innovation and price declines.

Revised version, posted December 22, 2016

working Paper

Who Really Benefits from Agricultural Subsidies? Evidence from Field-level Data

If agricultural subsidies are largely capitalized into farmland values then expanding support for agriculture may not benefit farmers who rent the land they farm. Suddenly reducing subsidies may be problematic to the extent that land values already embody expectations about future subsidies. Existing evidence on the incidence of subsidies on land values is mixed. Identification is obscured by unobserved or imprecisely measured factors that tend to be correlated with subsidies, especially land quality and time-varying factors like commodity prices and adverse weather events. A problem that has received less attention is the fact that subsides and land quality on rented land may differ from owned land. Since most farms possess both rented and owned acreage, farm-level measures of subsidies, land values and rental rates may bias estimated incidence. Using a new, field-level data set that, for the first time, precisely links subsidies to land parcels, we show that this bias is considerable: Where farm-level estimates suggest an incidence of 20 to 79 cents of the marginal subsidy dollar, field-level estimates from the same farms indicate that landlords capture just 10–25 cents. The size of the farm and the duration of the rental arrangement have substantial effects. Incidence falls by 5–15 cents per acre when doubling total operated acres, and the incidence falls by 0.1–1.2 cents with each additional year of the rental arrangement. Low incidence of subsides on rents combined with the farm-size and duration effects suggest that farmers renting land have monopsony power.

Published Version: Barrett E. Kirwan, Michael J. Roberts; Who Really Benefits from Agricultural Subsidies? Evidence from Field-level Data. Pages 1095-1113 American Journal of Agricultural Economics.