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How Can Renewable Portfolio Standards Lower Electricity Prices?

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  • Fischer, Carolyn

    ()
    (Resources for the Future)

Abstract

Some studies of renewable portfolio standards find that regulations increase generation costs; others find that reduced demand for nonrenewable energy sources lowers natural gas prices and that electricity prices follow. This paper presents reasoning for why these predictions can vary in the direction as well as in the magnitude of their effects. The driving factors are the relative elasticities of electricity supply from both fossil and renewable energy sources. The availability of other baseload generation is another factor, whereas demand elasticity influences only the magnitude of the price effects, not the direction of those effects.

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File URL: http://www.rff.org/RFF/documents/RFF-DP-06-20.pdf
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Bibliographic Info

Paper provided by Resources For the Future in its series Discussion Papers with number dp-06-20.

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Date of creation: 05 May 2006
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Handle: RePEc:rff:dpaper:dp-06-20

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Related research

Keywords: portfolio standards; natural gas; renewable energy; climate change;

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  1. Fischer, Carolyn & Newell, Richard G., 2008. "Environmental and technology policies for climate mitigation," Journal of Environmental Economics and Management, Elsevier, vol. 55(2), pages 142-162, March.
  2. Krichene, Noureddine, 2002. "World crude oil and natural gas: a demand and supply model," Energy Economics, Elsevier, vol. 24(6), pages 557-576, November.
  3. Palmer, Karen & Burtraw, Dallas, 2005. "Cost-effectiveness of renewable electricity policies," Energy Economics, Elsevier, vol. 27(6), pages 873-894, November.
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Cited by:
  1. Rüdiger Pethig & Christian Wittlich, 2009. "Interaction of Carbon Reduction and Green Energy Promotion in a Small Fossil-Fuel Importing Economy," CESifo Working Paper Series 2749, CESifo Group Munich.
  2. Bhattacharya, Suparna & Giannakas, Konstantinos & Schoengold, Karina, 2013. "Market and Welfare Effects of Renewable Portfolio Standard in the Vertically Differentiated U.S. Energy Markets," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 151216, Agricultural and Applied Economics Association.
  3. Moreno, Fermín & Martínez-Val, José M., 2011. "Collateral effects of renewable energies deployment in Spain: Impact on thermal power plants performance and management," Energy Policy, Elsevier, vol. 39(10), pages 6561-6574, October.
  4. Liliana Gelabert & Xavier Labandeira & Pedro Linares, 2011. "Renewable Energy and Electricity Prices in Spain," Working Papers 01-2011, Economics for Energy.
  5. Constant Tra, 2009. "Have Renewable Portfolio Standards Raised Electricity Rates? Evidence from U.S. Electric Utilities," Working Papers 0923, University of Nevada, Las Vegas , Department of Economics.
  6. Christoph Böhringer & Knut Rosendahl, 2010. "Green promotes the dirtiest: on the interaction between black and green quotas in energy markets," Journal of Regulatory Economics, Springer, vol. 37(3), pages 316-325, June.
  7. Vajjhala, Shalini & Paul, Anthony & Sweeney, Richard & Palmer, Karen, 2008. "Green Corridors: Linking Interregional Transmission Expansion and Renewable Energy Policies," Discussion Papers dp-08-06, Resources For the Future.

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