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Technology Choices in the U.S. Electricity Industry before and after Market Restructuring

Zsuzsanna Csereklyei and David I. Stern

Year: 2018
Volume: Volume 39
Number: Number 5
DOI: 10.5547/01956574.39.5.zcse
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Abstract:
We study the drivers of the adoption of electricity generation technologies between 1970 and 2014 in the lower 48 U.S. states. Since the 1990s, major electricity market restructuring took place in some parts of the United States. We explore the implications of changing from a regulated "cost-of-service", or rate of return, system to liberalized wholesale electricity markets on technology and fuel choices. We find that wholesale market restructuring resulted in significant immediate investment in various natural gas technologies due to higher expected profits, and a reduction in coal investments. In states that adopted liberalized wholesale electricity markets, higher natural gas price expectations resulted in more investment in coal and renewable technologies, while higher coal price expectations resulted in lower coal-fired baseload power investments. Natural gas price expectations, therefore, have the potential to significantly shape the power generation landscape of the future.Keywords: Technology choices, Electricity industry, Market restructuring



Vertical Separation of Transmission Control and Regional Production Efficiency in the Electricity Industry

Yin Chu

Year: 2021
Volume: Volume 42
Number: Number 1
DOI: 10.5547/01956574.42.1.ychu
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Abstract:
This study investigates the divestiture of transmission control from vertically-integrated power producers, aimed to maintain non-discriminatory access of the transmission network. I ask whether the vertical separation is sufficient to enhance how efficiently production is allocated among generators (i.e., regional production efficiency). Using a difference-in-difference strategy, I compare the treated region, Southwest Power Pool (SPP), with a control region, where no restructuring activities were implemented. Based on robust empirical results, I fail to find significant market wide evidence of improvement in regional production efficiency associated with the vertical separation of transmission control. However, looking into subgroups of generators, I find mixed evidence of cost savings via reallocation of production resources: (1) coal units are dispatched more efficiently after the restructuring; (2) this is not true for two types of gas units with different combustion technologies and cost efficiency.





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