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The Economic Effects of Interregional Trading of Renewable Energy Certificates in the U.S. WECC

Andres P. Perez, Enzo E. Sauma, Francisco D. Munoz, and Benjamin F. Hobbs

Year: 2016
Volume: Volume 37
Number: Number 4
DOI: 10.5547/01956574.37.4.aper
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Abstract:
In the U.S., individual states enact Renewable Portfolio Standards (RPSs) for renewable electricity production with little coordination. Each state imposes restrictions on the amounts and locations of qualifying renewable generation. Using a co-optimization (transmission and generation) planning model, we quantify the long run economic benefits of allowing flexibility in the trading of Renewable Energy Credits (RECs) among the U.S. states belonging to the Western Electricity Coordinating Council (WECC). We characterize flexibility in terms of the amount and geographic eligibility of out-of-state RECs that can be used to meet a state’s RPS goal. Although more trade would be expected to have economic benefits, neither the size of these benefits nor the effects of such trading on infrastructure investments, CO2 emissions and energy prices have been previously quantified. We find that up to 90% of the economic benefits are captured if approximately 25% of unbundled RECs are allowed to be acquired from out of state. Furthermore, increasing REC trading flexibility does not necessarily result in either higher transmission investment costs or a substantial impact on CO2 emissions. Finally, increasing REC trading flexibility decreases energy prices in some states and increases them elsewhere, while the WECC-wide average energy price decreases. Keywords: Renewable Portfolio Standards, Renewable Energy Credits, Transmission planning, Western Electricity Coordinating Council, Electricity markets



Solar Bait: How U.S. States Attract Solar Investments from Large Corporations

Jed J. Cohen, Levan Elbakidze, and Randall Jackson

Year: 2020
Volume: Volume 41
Number: Number 2
DOI: 10.5547/01956574.41.2.jcoh
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Abstract:
Past solar adoption literature has focused primarily on households without significant attention to the potential of commercial properties as sites for solar generation. We examine firms' decisions to install solar panels on their properties using state and firm level data from the U.S. We are interested in the effects of state level characteristics, including policies and regulations, on firm decisions regarding solar investments. We find that state characteristics that influence the return-on-investment from solar installations, most notably solar intensity, are important for commercial adoption decisions. Further, the results suggest that certain state level policies, including solar carve-outs in renewable portfolio standards, financing programs and tax breaks, can incentivize firms to install solar panels. Across different model specifications, we observe that firm installation decisions are correlated with personal electric vehicle ownership rates. This may indicate a 'green' business marketing strategy, whereby firms install solar to improve their social responsibility image.



Renewable Portfolio Standards

Rachel Feldman and Arik Levinson

Year: 2023
Volume: Volume 44
Number: Number 5
DOI: 10.5547/01956574.44.4.rfel
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Abstract:
State-level renewable portfolio standards (RPSs) aim to encourage renewable energy and discourage greenhouse gas (GHG) emissions from the electric power sector in the United States. Do they work? Some prominent government agencies and advocacy groups assert that U.S. renewables growth has been largely due to RPSs. That seems unlikely, given that in most regions, renewables exceed RPS requirements. But it is not an easy question to answer, thanks to interstate trading and the possibility that states with abundant renewable resources might set the most ambitious RPS goals. We combine the best features of four recent academic studies, using ordinary least-squares and instrumental variables approaches. In some specifications, RPSs do appear to reduce the use of natural gas to generate electricity and decrease GHG emissions, while boosting the use of wind and solar power. But the effects are small—consistent with the academic findings and in contrast to the public claims and policy goals.





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