As with other commodities, electricity is often traded on both forward and spot markets. This was initially true in the restructured California electricity industry from 1998 to 2000. Though the power traded in the forward and spot markets was for delivery at the same times and locations, prices often differed in significant and predictable ways. We consider several explanations for this apparent inefficiency, concluding that uncertainty about regulatory penalties for trading in the spot market caused most firms to avoid trading on inter-market price differences. The few firms that did carry out these trades did not find it profit-maximizing to eliminate the price differences. Skyrocketing prices in the summer of 2000, however, changed the major buyers’ (utilities’) incentives and increased the price differentials between the markets.

This paper examines the impact of individual human operators on the fuel efficiency of power plants. Although electricity generation is a fuel and capital intensive enterprise, anecdotal evidence, interviews, and empirical analysis support the hypothesis that labor, particularly power plant operators, can have a non-trivial impact on the operating efficiency of the plant. We present evidence to demonstrate these effects and survey the policies and practices of electricity producing firms that either reduce or exacerbate fuel efficiency differences across individual plant operators.

This paper analyzes the effects of the New Source Review (NSR) environmental regulations on coal-fired electric power plants. The New Source Review program, which grew out of the Clean Air Act of 1970, required new plants to install costly pollution control equipment but exempted existing plants with a grandfathering clause. Previous theoretical research has shown that vintage differentiated regulations, like NSR, can lead to distortions, and if the distortions are large, the short-run effect of a regulation like NSR may be to increase pollution rather than reduce it. Older, dirtier plants may be kept in service longer or run more intensively since replacing them becomes more expensive. In the case of NSR, there is also an effect associated with its enforcement. Since upgrading a plant could potentially qualify it as a new plant, the old plants may have done less maintenance leading to lower efficiency and higher emissions. This paper attempts to estimate the extent to which these mechanisms have impacted coal-fired electric power plants. We find suggestive evidence that NSR increased operating lifetimes of plants in areas where environmental regulations were most stringent. We also find evidence that the risk of NSR enforcement reduced capital expenditures at plants. However, we find no discernable effect on the operating costs or fuel efficiency of these plants.

Low-income countries are expected to contribute almost all of the growth in global energy demand over the coming decades. A large body of research spanning several decades has generated a deep understanding of energy economics in the U.S.—but policy makers have little rigorous evidence about what optimal energy policy may look like in a setting where policy makers face pressures to simultaneously reduce poverty, stem growing inequality, and stimulate economic growth, while also protecting the environment. Second-best policy for correcting environmental externalities may look different in settings with frictions that are common in developing settings, such as credit constraints, the cognitive stress of poverty, and weak institutions.

Energy generation in low-income countries often generates large negative health consequences. But reliable energy has also facilitated higher levels of economic welfare than ever before: energy powers hospitals, schools, homes, transport for billions, and other industries that have enabled higher qualities of life and longer life expectancies. How can the billions of people who currently have no or low-quality access to electricity reach higher, safer, and healthier standards of living, while also minimizing the potential damages of environmental changes? And how can this be done given the political pressures, credit constraints, corruption, and other market failures that are common in low-income contexts? Motivated by the broader goal of reducing poverty and increasing welfare among the poor, my research attempts to inform policies that reduce poverty while protecting individuals against the environmental damages that have often accompanied economic growth through industrialization in the past two centuries.

In the first chapter, coauthored with Joshua Dean, we explore the roles of credit constraints and inattention in the under-adoption of high-return technologies. We study this question in the case of energy efficient cookstoves in Nairobi. Using a randomized field experiment with 1,000 households, we estimate a 300% average annual rate of return to investing in this technology, or $120 per year in fuel savings—around one month of income. Despite this, adoption rates are low: eliciting preferences using an incentive-compatible Becker-DeGroot-Marschak mechanism, we find that average willingness-to-pay (WTP) is only $12. Households would need to have a discount factor of 0.88 per week to rationalize this. To investigate what drives this puzzling pattern, we cross-randomize access to credit with two interventions designed to increase attention to the costs and benefits of adoption. Our first main finding is that credit doubles WTP and closes the energy efficiency gap over the period of the loan. Second, credit works in part through psychological mechanisms: around one-third of the total impact of credit is caused by inattention to loan payments. We find no evidence of inattention to energy savings. These findings have implications for second-best regulation of pollution externalities using subsidies versus taxes. These results contribute to the debate on the efficacy of taxation versus technology subsidies in correcting environmental externalities: in low-income contexts, where credit constraints are common, Pigovian taxation alone may not be the optimal policy. Private benefits and avoided environmental damages generate average welfare gains of $600 for each stove adopted and used for two years. A subsidy would have a marginal value of public funds of $19 per $1 spent. Low- and middle-income countries will propel global energy demand in coming decades, increasing costs for the poor and straining energy systems, and credit constraints will exacerbate deadweight loss by limiting the adoption of energy efficient technologies. We show that technology subsidies correct environmental externalities more efficiently than Pigovian taxation alone in these settings.

In the second chapter I study how temperature affects household energy demand in low-income countries. I use 132,375,282 hourly electricity consumption observations from 5,975 households in South Africa to estimate the causal effects of short-term temperature changes on household electricity consumption. The estimates flexibly identify a constant log-linear temperature response—for every 1C increase in temperature, electricity consumption decreases by 4.1% among temperatures below the heating threshold but increases by 8.1% among temperatures above the cooling threshold. This relationship is driven more strongly by seasonal than hourly temperature changes. Holding all else constant, a 3.25C increase in temperatures would reduce electricity consumption by 1,093.4 kWh (6.2%) per year per household. Widespread use of electric heating due to limited residential gas heating infrastructure likely drives this. These results point to important regional heterogeneity in how temperature increases may affect household energy demand in the coming decades.

In the third chapter, coauthored with Eric Hsu, Oliver Kim, Edward Miguel, Felipe Vial, and Catherine Wolfram, we study how political favoritism shapes the provision of public goods. We study the implementation of Kenya’s Last Mile Connectivity Project, a large-scale program to connect all households in Kenya to electricity. Using administrative construction data and voting data from the 2013 and 2017 presidential elections, we find evidence that sites in wards that voted for the current president in 2013 are more likely to be included in the program, and that construction at these sites proceeds on average more quickly than those that voted for the opposition---a pattern consistent with clientelistic behavior around the election cycle. To account for unobservables that may threaten identification, we repeat our analysis using only adjacent electoral wards, where unobservable characteristics are less likely to differ, and find similar results.

emissions. This paper summarizes the initiatives likely to impact the electricity generating sector. We present calculations showing that there is a substantial risk that two of the most prominent policies could simply result in a reshuffling, on paper, of the electricity generating resources within the West that are dedicated to serving California. This reshuffling is different from the conventional leakage problem as it involves no physical changes to the way electricity is generated across regulated and unregulated regions, but is instead driven by a contractual reshuffling of who buys power from whom. The problem is similar to an ineffective consumer boycott. The problem is still present but less severe if more Western states adopt carbon limitations. We also show that some of the least market-based initiatives, the renewable portfolio standards (RPS), are likely to have the biggest near-term impact on the carbon-intensity of electricity generation in the West. Thus the scale of RPS programs may be limiting the potential role of non-renewable options in reducing carbon emissions from the electricity sector.

For political and practical reasons, environmental regulations sometimes treat point source polluters, such as power plants, differently from mobile source polluters, such as vehicles. This paper measures the extent of this regulatory asymmetry in the case of nitrogen oxides (NOx), the criteria air pollutant that has proven to be the most recalcitrant in the United States. We find significant differences in marginal abatement costs across source types with the marginal cost of reducing NOx from cars less than half of the marginal cost of reducing NOx from power plants. Our findings have important implications for the efficiency of NOx emissions reductions and, more broadly, the benefits from increasing the sectoral scope of environmental regulation. We estimate that the costs of achieving the desired emissions reductions could have been reduced by nearly $2 billion, or 9 percent of program costs, had marginal abatement costs been equated across source types.