Meet the Expert: Matthew Oliver

Master of the rebound — Economist Matthew Oliver measures the sometimes concealed costs of pivoting to clean energy

Students in Matthew Oliver’s economics of environment and international energy markets classes likely don’t have a clue about his unusual journey to the lectern: “I was bent on being a rock and roll musician from the time I was 16, and so I ended up dropping out of the University of Memphis after just three semesters,” says Oliver, an associate professor in the School of Economics at the Georgia Institute of Technology. “I was on tour for eight years — and I was starting to feel burned out.” 

At a crossroads, Oliver decided to end his musical career — a choice he credits with launching him into academia. “I was 28 and wondering what to do with my life, so I reenrolled in college and discovered economics.”  With a longtime love of the environment and growing concern for the climate, says Oliver, “I grew fascinated with solar power and other renewables and the new markets emerging around them.”  

Today, his work in energy and environmental economics has implications for policies shaping the energy transition, from subsidies for rooftop solar to the expansion of battery storage. 

“The current frontier of energy economics is electricity and renewables, and these are areas I am passionate about,” he says. 

PVs and amped up electric use 

One of Oliver’s core research thrusts is the solar rebound effect (SRE). This phenomenon involves a quirk of human behavior: When people install solar photovoltaic (PV) panels on the roofs of their homes, they often consume more electricity. “The introduction of solar energy does not perfectly displace grid-supplied energy, but instead reduces demand for grid-supplied energy on a less than one-for-one basis, because the household increases its total electricity consumption,” says Oliver. The bottom line: Solar PV systems may not lead to as much carbon emission reduction as anticipated.  

Shahaboddin H. Toroghi, at the time a graduate student in the Georgia Tech School of Building Construction and School of Computer Science & Engineering, initially raised the question of residential SRE with Oliver. Together, they investigated the question, studying neighborhood-level data from Fulton County, Georgia, and developed a novel way of modeling SRE for residential PV. Their insights appeared in the October 1, 2019 issue of the journal Applied Energy.  

“If we support solar with public subsidies, offering tax credits and setting up net metering systems with utilities to incentivize the adoption of renewables, we need to be aware of the real benefit-cost ratio,” Oliver says. “If our public dollars going toward residential PV are intended to reduce CO₂ emissions, we’re not getting as big a bang for the buck as we might want.”  The goal, Oliver says, is for policymakers and government carbon reduction schemes to take note of these findings and build them into their calculations. 

Since the 2019 paper, Oliver has continued to explore residential SRE and its subtle but significant implications for decreased reliance on fossil fuels – including an accepted and forthcoming article which investigates the microeconomics of SRE in the Journal of the Association of Environmental and Resource Economists. But he has also studied the very different case of utility-scale solar.  These one to 100 megawatt (MW) size installations, built and operated by utility providers to the electric grid, do not demonstrate the SRE. The reason for this, Oliver speculates, is that homeowners do not perceive the electricity from utility-scale solar generation as a commodity that they can consume at higher levels — unlike residential PV electricity generation. The absence of net metering for a household reduces the incentive to splurge on electricity. 

“If utility-scale solar is unlikely to induce a solar rebound effect, perhaps subsidy dollars could be redirected here, and have a bigger bang for the buck,” says Oliver. 

From gas to renewables 

The play of consumer demand in energy markets has long fascinated Oliver. Both of his grandfathers worked for Memphis Light, Gas and Water, kindling his early interest in energy. “When I went to graduate school at the University of Wyoming, my dissertation topic was trying to figure out why natural gas produced by the state was selling for dramatically different rates in different regions,” he says. “The state wanted to know why it was losing a lot of revenue in some places but doing alright in others.” 

Oliver’s studies revealed that pipeline capacity held the key to this question. “At the time the shale gas boom was in full swing with a massive increase in domestic supply, but the pipeline network wasn’t growing fast enough to keep up with the supply and bring it to market,” he says. “Bottlenecks kept popping up in places that led to exorbitant prices for shipping gas over some important routes.” 

A few years after he arrived at Georgia Tech in 2013, Oliver gradually shifted focus from the distribution and pricing of natural gas to the up-and-coming markets for solar and other renewables. “Georgia is not a fossil fuel-producing state, and Georgia Tech was positioning itself as a regional leader in clean energy, so I decided to return to my original focus in energy economics,” he says. 

Among his research concerns today is the impact of intermittent energy sources such as wind and solar on the grid. “Our electric system has to balance out supply and demand all the time, and it’s monitored on a second-by-second basis so operators can react quickly to fluctuations,” he says. When renewable energy sources that depend on variable inputs like sun and wind can’t produce adequate electricity at certain times, grid operators currently rely on fossil fuel sources such as natural gas as backup. But a complete transition to carbon-free electricity requires a new approach. 

“We want to make this transition because the climate implications of not doing it are bad, but we have to understand what is required when we commit to going completely electric,” he says. Grid operators will need to respond to greater variability in demand to keep the system in balance. “This is probably going to require additional investment in fast-ramping generation, which for now may be natural gas generators,” he notes. “The other implication is that to maximize the potential of wind and solar we have to develop an effective electricity storage technology much faster than we’ve been able to do so far.” 

Student orientation 

Oliver won’t be confronting the economics and policy end of these critical issues alone. As a committed mentor to undergraduate and graduate students, he encourages the pursuit of questions that might hold significance for the energy transition. 

“A lot of my engagement with students is helping them develop their ideas, brainstorming and thinking things through with them,” he says.  

Oliver, who until recently served as director of the School of Economics’ undergraduate programs, has made the Georgia Tech honor roll for excellence in teaching for multiple years. “At the end of the day, the most rewarding thing about working at Georgia Tech has got to be the interaction with our students,” he says. “They’re so brilliant and so determined to do good things — the right thing.”  Oliver’s goal is to help them achieve, in small, incremental ways, “whatever vision they have for themselves.” 

He marvels at this opportunity every day. “I find it amazing, and deeply ironic, that I get to teach kids who are all the things that I was not when I was their age,” he says.