Distributional impacts of technology pathways for US power sector transformation

Highlights

• Energy-economy model connects power sector evolution to distributional impacts
• Exploration of various technological pathways and household-level economic welfare
• Findings reveal important intersectoral interactions, fuel market feedback effects
• Households sensitive to fuel price changes, present need to evaluate entire energy budget

Abstract

We evaluate the distributional impacts of technological pathways for transforming the US electric power sector. We leverage a linked, economy-engineering model that details how changes in the power sector impact the US economy and vice versa, allowing us to translate power sector transformation to household economic welfare. 

By exploring the extent to which the US electric power sector deploys new technologies, several findings related to economic incidence are brought to light. Increased competition for fuels between industrial sectors and households has a relatively larger impact on lower income households given their increased exposure to energy burden while increases in fossil energy utilization benefit higher-income owners of extractive sector capital. Thus, increases to fossil-fuel demand in the power sector are found to be regressive with natural gas playing a pivotal role given its end-use consumption by households. Increasing shares of non-fossil generation as well as increased deployment of battery and transmission capacity are estimated to have progressive impacts given relatively muted intersectoral interactions. 

Results and conclusions highlight important distributional considerations surrounding how the deployment of certain technologies can ultimately impact different income groups.