Nuremberg Research Seminar in Eoconomics on 17 January 2024 – Zoom

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You are invited to join the weekly Nuremberg Research Seminar in Economics on 17 January 2024, from 13.15 to 14.45 pm. The seminar will be held via ZoomJohannes Paha (FAU Erlangen-Nürnberg) will be talking about „Can intermittent renewable energies help reduce load shedding in South Africa?”.

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In many developing countries, electricity must periodically be shut down if demand exceeds supply. Analyzing South African data, we study whether, by increasing supply, the renewable energy transition reduces the prevalence of load shedding, or whether its prevalence is increased if, in light of aging conventional power plants, there remains too little renewable electricity in times of high demand. We employ an instrumental variables approach to control for endogeneity and find that out of every kWh of wind power, up to 74% can be used to reduce the extent of load shedding. While the stable supply of wind helps reduce load shedding reliably, solar power has a more volatile impact. It reduces load shedding in the afternoon, when electricity demand rises as people return from work. This positive effect must, however, be contrasted with high supply around noon that meets only moderate demand, and zero supply in the evening when demand soars. These results are relevant for grid operators as well as investors because wind power requires large scale investments, whereas solar capacity can also be build in smaller tranches.