Advanced Search
MyIDEAS: Login to save this paper or follow this series

The Impact of Rate-of-Return Regulation on Electricity Generation from Renewable Energy

Contents:

Author Info

  • Adrienne M. Ohler

    ()
    (Department of Economics, Illinois State University)

Registered author(s):

    Abstract

    Traditional electric utility companies face a trade-off between building generation facilities that utilize renewable energy (RE) and non-renewable energy (non-RE). The firm’s input decision to build capacity for either source depends on several constraining factors, including input prices, policies that promote or discourage RE use, and the type of regulation faced by the firm. This paper models the utility company’s decision between RE and non-RE capital types. From the model, two main results are derived. First, rate-of-return (ROR) regulation decreases the investment in RE capital relative to the unregulated firm. These findings suggest restructuring electricity generation markets, which removes the ROR on generating assets, can increase the relative use of RE. Second, the renewable portfolio standard (RPS) increases the investment in capital and labor that requires RE as a source of electricity, as expected. The model shows that the impact of an RPS depends on the amount of ROR regulation.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://economics.illinoisstate.edu/RePec/Papers/RPS_Firm_Theory.pdf
    File Function: First version, 2011
    Download Restriction: no

    Bibliographic Info

    Paper provided by Illinois State University, Department of Economics in its series Working Paper Series with number 20110403.

    as in new window
    Length: 20 pages
    Date of creation: May 2011
    Date of revision:
    Handle: RePEc:ils:wpaper:20110403

    Contact details of provider:
    Web page: http://economics.illinoisstate.edu

    Related research

    Keywords: renewable portfolio standard; renewable energy; rate-of-return regulation;

    Find related papers by JEL classification:

    This paper has been announced in the following NEP Reports:

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Madlener, Reinhard & Stagl, Sigrid, 2005. "Sustainability-guided promotion of renewable electricity generation," Ecological Economics, Elsevier, vol. 53(2), pages 147-167, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:ils:wpaper:20110403. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (B. Andrew Chupp).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.