Date of Award

8-2013

Document Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Legacy Department

Economics

Advisor

Sauer, Raymond

Committee Member

Fleck , Robert

Committee Member

Hanssen , Andrew

Committee Member

Miller , Daniel

Abstract

In an attempt to motivate the transition away from fossil fuels, reduce carbon emissions and diversify electricity supply, twenty-nine states and the District of Columbia have adopted a Renewable Portfolio Standard (RPS). An RPS is a form of regulation that requires increased electricity production from renewable energy sources. These standards vary by state but generally require a minimum percentage of electricity generation to come from renewable technologies by a predetermined date.
In the first chapter I examine the effect of the adoption of an RPS on electricity rates, making use of the increased availability of data since several policies' adoption. Using a fifty state panel over the years 1990-2010, this study uses a difference-in-difference and a fixed effects estimation to measure how the adoption of an RPS affects the price of electricity in state markets. Empirical findings show that states that have adopted an RPS have approximately a 20% higher all-retail electricity price than states that do not have RPS. Following the adoption of this regulation, a state can expect to see electricity prices rise by roughly 5% on average per year relative to states with no RPS. Once the legislation has been in place for almost a decade, electricity rates begin to dramatically increase upwards of 10% per year.
In the second chapter, I observe the economic, social and political factors that prompt a state to adopt a Renewable Portfolio Standard. , I estimate a probit model to determine the probability a state will adopt an RPS in a year given its present political and economic climate. Results show that a deregulated electricity market, a high per-capita GDP, a strong democratic presence in the state legislature, high renewable capacity, and a strong incidence of natural gas are indicators a state will pass an RPS. Whether or not a state is a net importer or exporter of electricity is not a significant indicator of adoption of an RPS within a state.
The third chapter focuses on Renewable Energy Credits (RECs). In order to prove compliance with the RPS regulation established by the state legislature, an electric utility must produce RECs to a state regulatory commission. One REC represents one megawatt hour of electricity generated from renewable technologies. As the market for tradable RECs develops, it becomes increasingly important to examine the scope and effects credit trading may have on energy production and prices. As credit trading has had very little experience to date in the United States this paper serves to present a detailed description of the emerging market for RECs and discuss possible implications it may have on policy implementation, investment in renewable energy production and prices to the consumer. An examination is given to the New Jersey Solar Renewable Energy Credit (SREC) market.

Included in

Economics Commons

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