The Economic Impacts of High Wind Penetration Scenarios in the United States

Stuart Cohen, Justin Caron

Research output: Contribution to journalArticlepeer-review

16 Scopus Citations


The U.S. electric sector is experiencing rapid increases in renewable generation with an expectation of continued growth. We examine the impacts of increased wind electricity on the U.S. economy using a hybrid model that links a detailed electric sector model (the National Renewable Energy Laboratory's Regional Energy Deployment System [ReEDS]) with a computable general equilibrium model of the U.S. economy (the Massachusetts Institute of Technology's U.S. Regional Energy Policy [USREP] model). Increasing wind capacity displaces fossil fuels for electricity generation, which depresses fossil fuel prices and reduces economy-wide CO2 emissions. Competitive wind deployment in the reference scenario achieves these outcomes with lower electricity prices than a scenario with wind capacity fixed at 2016 levels. Lower fossil fuel and electricity prices benefit low-income households, but the dominant economic impacts are driven by increased electric sector investment and capital returns, which primarily benefit those with higher incomes. Overall, cost-competitive wind provides benefits to the U.S. economy that are initially low but rise beyond 2030 to achieve cumulative welfare and GDP improvements of $110 and $111 billion through 2050. Prescribing additional wind deployment (meeting 35% of demand by 2050) increases post-2030 electricity prices but not more so than keeping wind capacity fixed at 2016 levels. The negative effect of higher prices on welfare, however, is outweighed by higher returns from the additional wind investment. While these changes favor higher income classes, we find economy-wide benefits through 2040. These benefits diminish by 2050, but the cumulative additional gains through 2050, beyond the reference case, are $192 billion in welfare and $150 billion in GDP.

Original languageAmerican English
Pages (from-to)558-573
Number of pages16
JournalEnergy Economics
StatePublished - Oct 2018

Bibliographical note

Publisher Copyright:
© 2018 Elsevier B.V.

NREL Publication Number

  • NREL/JA-6A20-70144


  • Capacity expansion
  • Distributional effects
  • Electricity
  • General equilibrium
  • Renewables
  • Welfare
  • Wind


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