“Kelly Neill studies how a major hydroelectric scheme operator values its stored water. She aims to inform policymakers who allocate water between hydroelectric and competing uses. Using wholesale electricity market bidding data, she estimates a simple descriptive function of the opportunity cost of hydro generation, directly tied to the operator’s implicit water valuation. The function exhibits nearly complete pass-through of an exchange-traded electricity futures price, and decreases with reservoir volumes and snowfall. It remained stable even when the value of alternative water uses was high, as a connected river ceased-to-flow. These results motivate the development of futures-linked administered water pricing when scheme operators are pivotal in supplying environmental water to areas of the river system.”
Bio: Kelly Neill is an assistant professor in the School of Economics at the University of Sydney. She is also a Non-resident Scholar at the Center for Energy Studies at Rice University. Kelly’s research interests are empirical industrial organization and energy economics, with a focus on natural gas and electricity markets. She has studied how electricity and gas markets interact, the consequences of restricting gas exports, and the value of water stored for hydro-electric generation.