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Do Mandatory U.S. State Renewable Portfolio Standards Increase Electricity Prices?

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  • Wang, Hongbo

Abstract

Renewable Portfolio Standards (RPS) are U.S. state mandates that utilities produce some of their electricity using renewable energy sources in an effort to reduce greenhouse gas emissions. While advocates highlight the potential long-term benefits of RPS, critics argue that RPS will increase electricity prices due to the higher costs of renewable energy generation. However, to date, there are no published empirical studies of the effect of RPS on electricity prices. Using state-level panel data from 1990 to 2011 and the difference-in-differences (DID) method, I find that implementation increases electricity prices when the RPS policy first becomes binding.

Suggested Citation

  • Wang, Hongbo, 2014. "Do Mandatory U.S. State Renewable Portfolio Standards Increase Electricity Prices?," MPRA Paper 59165, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:59165
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    References listed on IDEAS

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    Cited by:

    1. Grafström, Jonas, 2023. "Spark of Transformation: The Impact of Electricity Prices on Europe's Industrial Landscape – Introducing the Green Industrial Location Attractiveness Index (GILAI)," Ratio Working Papers 369, The Ratio Institute.
    2. Ann Wolverton & Ron Shadbegian & Wayne Gray, 2022. "The U.S. Manufacturing Sector’s Response to Higher Electricity Prices: Evidence from State-Level Renewable Portfolio Standards," Working Papers 22-47, Center for Economic Studies, U.S. Census Bureau.
    3. Mai, Trieu & Cole, Wesley & Gates, Nathaniel & Greer, Daniel, 2021. "The prospective impacts of 2019 state energy policies on the U.S. electricity system," Energy Policy, Elsevier, vol. 149(C).
    4. Lee, Sang Ho & Choi, Daewoung Joey & Han, Seung Hun, 2023. "Corporate cash holdings in response to climate risk and policies," Finance Research Letters, Elsevier, vol. 55(PA).
    5. Kim, Jung Eun & Tang, Tian, 2020. "Preventing early lock-in with technology-specific policy designs: The Renewable Portfolio Standards and diversity in renewable energy technologies," Renewable and Sustainable Energy Reviews, Elsevier, vol. 123(C).

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    More about this item

    Keywords

    Renewable Portfolio Standards; State electricity prices;

    JEL classification:

    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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