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Incorporating Risk in Analysis of Tax Policies for Solar Power Investments

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  • Thomas R. Harris

    (Department of Economics, University of Nevada, Reno, Reno, NV 89557, USA)

Abstract

Often changes in federal and state tax policies for solar investments are made with little if any concern of risk or variabilities in input or output prices. Tax policy analysis such as the Investment Tax Credit are often analyzed as single data point not as a range of possible net returns. Tax policy analysis for solar investments must analyze impacts of potential federal or state tax credits that not only have the highest positive net returns under average conditions but also yield highest net returns under unfavorable conditions. This article discusses incorporation of risk for tax policy analysis and the use of Monte Carlo simulation to complete a tax policy analysis and provide a range of potential outcome from alternative policies.

Suggested Citation

  • Thomas R. Harris, 2017. "Incorporating Risk in Analysis of Tax Policies for Solar Power Investments," International Journal of Energy Economics and Policy, Econjournals, vol. 7(6), pages 112-118.
    • Handle: RePEc:eco:journ2:2017-06-14
    as

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    References listed on IDEAS

    as
    1. Richardson, James W. & Herbst, Brian K. & Outlaw, Joe L. & Gill, Robert Chope, II, 2007. "Including Risk in Economic Feasibility Analyses: The Case of Ethanol Production in Texas," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 25(2), pages 1-18.
    2. Charles F. Manski, 2013. "Response to the Review of ‘Public Policy in an Uncertain World’," Economic Journal, Royal Economic Society, vol. 0, pages 412-415, August.
    3. Richardson, James W. & Klose, Steven L. & Gray, Allan W., 2000. "An Applied Procedure For Estimating And Simulating Multivariate Empirical (Mve) Probability Distributions In Farm-Level Risk Assessment And Policy Analysis," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 32(2), pages 1-17, August.
    4. Manski, Charles F., 2013. "Public Policy in an Uncertain World: Analysis and Decisions," Economics Books, Harvard University Press, number 9780674066892, Spring.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Siti Inayatul Faizah & Uus Ahmad Husaeni, 2018. "Development of Consumption and Supplying Energy in Indonesia s Economy," International Journal of Energy Economics and Policy, Econjournals, vol. 8(6), pages 313-321.
    2. Mihail Nikolaevich Dudin & Vadim Nikolaevich Zasko & Olesya Igorevna Dontsova & Irina Valentinovna Osokina & Alisa Mikhailovna Berman, 2018. "Renewable energy sources as an instrument to support the competitiveness of agro-industrial enterprises and reduce their costs," International Journal of Energy Economics and Policy, Econjournals, vol. 8(2), pages 162-167.

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    More about this item

    Keywords

    Solar Energy; Solar Tax Credits; Monte Carlo Simulation;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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