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Impact of deployment of renewable portfolio standard on the electricity price in the State of Illinois and implications on policies

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  • Kung, Harold H.

Abstract

The Renewable Portfolio Standard (RPS) of the State of Illinois specifies a schedule for the fraction of electricity produced from wind to be phased in through 2025. The price of electricity due to implementation of RPS in order to achieve a six-year payback on investment on new wind farms was estimated for six scenarios that examined the effect of electricity consumption growth rate, production tax credit of $0.022/kWh or unrestricted investment tax credit of 30%, and projected changes in installed project costs. In all cases, the electricity price was found to be dominated by the installed project cost (capital cost). Thus, any policy that affects the capital cost directly or indirectly would have a significant effect on the electricity price. Whereas investment tax credit has a direct effect, policies that encourage technology improvement and improve transmission lines would have a similar effect of lowering the capital cost. Carbon tax, on the other hand, would increase the electricity price to the consumers, although it offers other benefits.

Suggested Citation

  • Kung, Harold H., 2012. "Impact of deployment of renewable portfolio standard on the electricity price in the State of Illinois and implications on policies," Energy Policy, Elsevier, vol. 44(C), pages 425-430.
  • Handle: RePEc:eee:enepol:v:44:y:2012:i:c:p:425-430
    DOI: 10.1016/j.enpol.2012.02.013
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    References listed on IDEAS

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    Cited by:

    1. Considine, Timothy J. & Manderson, Edward J.M., 2015. "The cost of solar-centric renewable portfolio standards and reducing coal power generation using Arizona as a case study," Energy Economics, Elsevier, vol. 49(C), pages 402-419.
    2. Rountree, Valerie, 2019. "Nevada's experience with the Renewable Portfolio Standard," Energy Policy, Elsevier, vol. 129(C), pages 279-291.
    3. Lee, Chul-Yong & Huh, Sung-Yoon, 2017. "Forecasting the diffusion of renewable electricity considering the impact of policy and oil prices: The case of South Korea," Applied Energy, Elsevier, vol. 197(C), pages 29-39.
    4. Schelly, Chelsea, 2014. "Implementing renewable energy portfolio standards: The good, the bad, and the ugly in a two state comparison," Energy Policy, Elsevier, vol. 67(C), pages 543-551.
    5. Timothy J. Considine & Edward J. M. Manderson, 2013. "The Cost of Solar-Centric Renewable Portfolio Standards," The School of Economics Discussion Paper Series 1323, Economics, The University of Manchester.
    6. Andres P. Perez, Enzo E. Sauma, Francisco D. Munoz, and Benjamin F. Hobbs, 2016. "The Economic Effects of Interregional Trading of Renewable Energy Certificates in the U.S. WECC," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4).
    7. Osmani, Atif & Zhang, Jun & Gonela, Vinay & Awudu, Iddrisu, 2013. "Electricity generation from renewables in the United States: Resource potential, current usage, technical status, challenges, strategies, policies, and future directions," Renewable and Sustainable Energy Reviews, Elsevier, vol. 24(C), pages 454-472.
    8. Zhang, M.M. & Zhou, D.Q. & Zhou, P. & Chen, H.T., 2017. "Optimal design of subsidy to stimulate renewable energy investments: The case of China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 71(C), pages 873-883.
    9. Paulo Henrique de Mello Santana, 2015. "Cost-effectiveness as Energy Policy Mechanisms: The Paradox of Technology-neutral and Technology-specific Policies in the Short and Long Term," Working Papers Working Paper 2015-02, Regional Research Institute, West Virginia University.
    10. de Mello Santana, Paulo Henrique, 2016. "Cost-effectiveness as energy policy mechanisms: The paradox of technology-neutral and technology-specific policies in the short and long term," Renewable and Sustainable Energy Reviews, Elsevier, vol. 58(C), pages 1216-1222.

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