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Economic Effects of Increased Penetration of Solar Energy

Edward A. Hudson

Year: 1980
Volume: Volume 1
Number: Number 3
DOI: 10.5547/ISSN0195-6574-EJ-Vol1-No3-5
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Abstract:
Recent energy policy proposals have given an important place to solar energy, and other new-technology energy sources, in the projected development of the U.S. energy system over the rest of the century. For example, the Domestic Policy Review of Solar Energy (U.S. Department of Energy, 1979), presented to the President in February 1979, raised the possibility that 20 percent of primary energy input in the year 2000 could be supplied from solar and other renewable sources. Since these technologies now provide only a small fraction of total energy input, changes of the magnitude involved in these proposals imply a major restructuring of the energy system.



Again, Federal Tax Credits Are Found Effective: A Reply

Edwin H. Carpenter and Cathy Durham

Year: 1985
Volume: Volume 6
Number: Number 3
DOI: 10.5547/ISSN0195-6574-EJ-Vol6-No3-11
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Abstract:
One of the greatest compliments that can be paid to a research effort is an attempt to refute its findings that instead replicates those findings. That is the present case. Commenting on Carpenter and Chester (1984), Peterson (1985) states, "The authors conclude that conservation credits have done little to stimulate conservation expenditures, but that the renewable energy credit has increased the demand for solar space and water heating systems. Unfortunately, problems with the data used by Carpenter and Chester cast doubt on their findings." Peterson then concludes, from his analysis of the "better" data set, "The percentages from the table suggest that solar purchasers are much more affected by the availability of tax credits than are conservation investors."



Solar Versus Conservation Tax Credits

H. Craig Petersen

Year: 1985
Volume: Volume 6
Number: Number 3
DOI: 10.5547/ISSN0195-6574-EJ-Vol6-No3-12
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Abstract:
In the late 1970s concern about energy shortages motivated Congress to establish federal income tax credits to individuals for (1) household energy conservation expenditures and (2) purchases of renewable energy systems. Under terms of the Energy Tax Act of 1978, the tax credit for conservation expenditures is 15 percent of the amount invested, with a maximum credit of $300. The credit for renewable energy systems (such as solar space or water heaters) was initially set at 30 percent of the first $2000 and 20 percent of the next $8000. In 1980, the Windfall Profit Tax Act increased the tax credit for renewable energy systems to 40 percent of the first $10,000 in qualifying expenditures-a maximum credit of $4000.



The Failure of Solar Tax Incentives: A Dynamic Analysis

G. Thomas Sav

Year: 1986
Volume: Volume 7
Number: Number 3
DOI: 10.5547/ISSN0195-6574-EJ-Vol7-No3-4
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Abstract:
In recent years we have witnessed governmental attempts to acceler-ate the stock demand for energy-saving durables with financial incentives implemented through the tax mechanism. At the federal level, income tax credits for the purchase of energy-saving durable stocks were introduced through the Energy Tax Act of 1978 (Public Law 95-618). In addition, many states have enacted their own energy-saving tax incentive legislation. A substantial body of this tax legislation has been aimed at accelerating substitution of solar-produced energy for conventional, nonrenewable energy resources in the residential and commercial building sectors. Along these lines, the bulk of engineering (so-called life-cycle) cost studies accompanying much of this legislation predicted that solar tax incentives would generate widespread market penetration with little or no delay.' However, casual observation reveals that tax-induced solar energy substitutions have not been widespread.This paper presents a dynamic model of investment decisions in solar processes-a model that captures the effect of tax legislation aimed at accelerating market penetration of solar energy.



Demand Subsidies Versus R&D: Comparing the Uncertain Impacts of Policy on a Pre-commercial Low-carbon Energy Technology

Gregory F. Nemet and Erin Baker

Year: 2009
Volume: Volume 30
Number: Number 4
DOI: 10.5547/ISSN0195-6574-EJ-Vol30-No4-2
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Abstract:
We combine an expert elicitation and a bottom-up manufacturing cost model to compare the effects of R&D and demand subsidies. We model their effects on the future costs of a low-carbon energy technology that is not currently commercially available, purely organic photovoltaics (PV). We find that: (1) successful R&D enables PV to achieve a cost target of 4c/kWh, (2) the cost of PV does not reach the target when only subsidies, and not R&D, are implemented, and (3) production-related effects on technological advance�learning-by-doing and economies of scale�are not as critical to the long-term potential for cost reduction in organic PV than is the investment in and success of R&D. These results are insensitive to two levels of policy intensity, the level of a carbon price, the availability of storage technology, and uncertainty in the main parameters used in the model. However, a case can still be made for subsidies: comparisons of stochastic dominance show that subsidies provide a hedge against failure in the R&D program.



The Implicit Carbon Price of Renewable Energy Incentives in Germany

Claudio Marcantonini, A. Denny Ellerman

Year: 2015
Volume: Volume 36
Number: Number 4
DOI: 10.5547/01956574.36.4.cmar
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Abstract:
This research analyzes the German experience in promoting Renewable Energy (RE) as an instrument to reduce GHG emissions. It identifies the cost of reducing CO2 emissions in the power sector through the promotion of wind and solar energy for the years 2006-2010. A RE carbon surcharge and an implicit carbon price due to the RE incentives are calculated. The RE carbon surcharge is the ratio of the net cost of the RE over the CO2 emission reductions resulting from actual RE injections into the electric power system. The implicit carbon price is the sum of the RE carbon surcharge and the EUA price. Results show that for the period analyzed both the RE carbon surcharge and the implicit carbon price of wind are on the order of tens of euro per tonne of CO2, while for solar are on the order of hundreds of euro per tonne of CO2.



Grid parity of solar energy: imminent fact or future's fiction

Spiros Papaefthimiou, Manolis Souliotis, and Kostas Andriosopoulos

Year: 2016
Volume: Volume 37
Number: Bollino-Madlener Special Issue
DOI: 10.5547/01956574.37.SI2.spap
View Abstract

Abstract:
One of the major questions related to renewable energy systems is whether we are approaching solar grid parity or not. Solar based power generation will play an important role in future sustainable energy mixes due to its high reliability, yield predictability and capacity for electricity production during peak demand when the electricity price is usually high. But nowadays the economic viability of these technologies depends on the subsidies usually granted, mainly by public authorities, and in a minor way by electricity producers. The article evaluates the potential of solar energy based technologies for viable electricity generation, focusing on Photovoltaics (PV) and Concentrated Solar Power (CSP) systems. The evaluation was not only focused on EU but also covered global markets, assessing the necessary barriers and thresholds preventing or boosting these technologies to reach grid parity. The observed rapid growth in deployment of the studied technologies (especially PV) in recent years is largely policy-driven and whether this trend will be sustainable depends on whether governments will continue to expand financial incentives and policy mandates, as well as address regulatory and market barriers. Keywords: Solar energy, Grid parity, Photovoltaics, Concentrated Solar Power systems.



Policy-Induced Expansion of Solar and Wind Power Capacity: Economic Growth and Employment in EU Countries

Jurate Jaraite, Amin Karimu and Andrius Kazukauskas

Year: 2017
Volume: Volume 38
Number: Number 5
DOI: https://doi.org/10.5547/01956574.38.5.jjar
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Abstract:
Given the intensifying debates on whether governments should promote particular renewable energy technologies, the main objective of this study is to investigate the long-and short-run effects of policy-induced expansion of renewable solar and wind technologies on economic growth and employment in 15 European Union (EU) member states during 1990-2013 by using panel-data time-series econometric techniques. Instead of relying on renewable energy consumption or generation as commonly done in the literature, we focus on the capacity for solar and wind power generation, which is largely a consequence of the EU's renewable energy policies. In summary, we find that, to date, renewable energy policy-induced wind and solar power capacity promotes growth and/or employment in the short run, but these capacity increases do not stimulate economic growth in the long run in the EU-15 region. In fact, our results tend to support the opposite relationship: increases in wind and solar power capacity are associated with negative economic growth, at least at the total economy level. Keywords: Economic growth, Employment, European Union, Granger causality, Panel cointegration, Policy, Renewable energy capacity, Solar energy, Wind energy



Consumer Preferences for Solar Energy: A Choice Experiment Study

Jamal Mamkhezri, Jennifer A. Thacher, and Janie M. Chermak

Year: 2020
Volume: Volume 41
Number: Number 5
DOI: 10.5547/01956574.41.5.jmam
View Abstract

Abstract:
Electricity generation in the United States is rapidly moving towards integrating more renewables into the system due to several factors, including cost competitiveness, consumer preferences, and state and federal policies, such as production and income tax incentives, renewable portfolio standards (RPSs), and state level subsidies for solar energy. While these policies have been researched comprehensively, in this paper we investigate consumer preference and willingness to pay toward renewable energy. Consumer preferences may impact the type of renewable energy utilized, as well as state-determined RPS requirements. We implement a choice experiment survey to gain understanding of consumer preferences and their preference heterogeneity. We conduct the survey in New Mexico, a state with RPS and great potential for renewables, particularly in solar where it ranks third in the U.S. for that potential. Focusing on the consumers of the state�s major utility, our choice experiment considers an increase in renewable energy and preference for different types of solar energy (rooftop solar and solar farm). We control for location heterogeneity (i.e., rural vs. urban), as well as exposure to solar installations. Utilizing multinomial logit and random parameter logit our results suggest respondents support an increased RPS solar requirement and they have a positive marginal willingness to pay (MWTP) for rooftop solar and smart meter installation. These values are impacted by several factors, including location and exposure to solar. We also observe a distance decay effect on respondents� MWTP for different solar plans. For regulators considering additional RPS levels, or utilities considering solar installations, the results provide improved information on consumer preferences, heterogeneity of response, and MWTP for solar energy.





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