Research

The benefits of expanding wind and solar electricity generation depend on their effect on the electricity production mix. Using hourly production data, I study the electricity transition to renewables in Uruguay, a country that currently has 94% of its grid green. First, I quantify how an increase in wind and solar production substitutes hydro, biomass, and fossil fuel electricity production. Second, I analyze how this transition reduces CO2 emissions in the context of large hydropower production. Third, I analyze how this affects spot prices. I find that the increase in wind and solar production has the following effects: (i) a displacement of hydro and fossil fuel production, especially in winter, with no effect on biomass; (ii) a reduction in CO2 emissions; (iii) a decrease in spot prices caused by the shutting off of the most (marginally) costly plants; and (iv) a spillover effect to the region due to an increase in exports to Argentina and Brazil. I find, however, that the increase in wind and solar production is insufficient to eradicate fossil fuels. These results show the effect of increasing renewables, how they interact with each other - particularly in hydro-dependent countries -, and their effect on emissions and spot prices.

Do female policymakers encourage the production of renewable energy compared to their male counterparts? Using instrumental variables, we conduct a cross-country analysis of 39 high-income countries for the years 1997-2020 using quota laws and women’s suffrage as instruments for women’s participation in the parliament. We find that a 1 percentage point increase in the proportion of women in the legislature increases renewable energy production by 1.54 percentage points. This study suggests that fostering policies that boost women's participation in policy-making positions is beneficial, especially when considering the positive spillover to other countries.

Since 2010, the Uruguayan government has fostered the installation of solar panels among firms to promote the production of small-scale renewable electricity. Under this policy, firms that have installed solar panels are allowed to feed any surplus electricity into the grid. Using a novel data set on firm-level electricity consumption and grid injection, we study the economic and environmental consequences of this policy. First, we find that installing a solar panel reduces the amount of electricity extracted from the grid. Second, we find that it increases the electricity injected into the grid. Third, we find that it reduces CO2 emissions only marginally. Fourth, we provide evidence of a rebound effect, which ranges from 20% to 26%. Lastly, we propose an alternative policy that allows firms to store their excess electricity in batteries rather than immediately injecting it into the grid. This policy would further reduce CO2 emissions by 2.7%, incentivizing the injection of electricity at night, when fossil-fuel-based facilities meet the demand at the margin.