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Economic performance of grid-connected photovoltaics in California and Texas (United States): The influence of renewable energy and climate policies

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  • Sivaraman, Deepak
  • Moore, Michael R.

Abstract

Various public policies in the United States are providing financial incentives for installation and generation of electricity from renewable resources. This article examines the influence of investment subsidies, greenhouse gas (GHG) prices, and renewable energy credit (REC) prices on the economic performance of grid-connected photovoltaic (PV) systems. Our model integrates PV output, capacity-factor-based dispatch, and cost-benefit financial components to evaluate new PV installations in California and Texas. Relative to the base case, the benefit–cost ratio increases between 5–53% in California and 5–38% in Texas for the policy-derived cases of GHG and REC prices. The economic performance of PV is higher in California due to higher grid electricity prices and the profile of displaced marginal fuels. A sensitivity analysis demonstrates the electricity and GHG prices required to achieve profitability. A key element of the economic analysis demonstrates the importance of assessing the marginal fuels displaced by the PV system, not the average mix of displaced fuels, in terms of accurately monetizing the GHG abatement embodied in the displaced fuels. In California, for example, the discounted benefits derived from pollution abatement under the marginal displacement approach were 1.6–3.0 times higher than under the three average fuel mix cases.

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  • Sivaraman, Deepak & Moore, Michael R., 2012. "Economic performance of grid-connected photovoltaics in California and Texas (United States): The influence of renewable energy and climate policies," Energy Policy, Elsevier, vol. 49(C), pages 274-287.
    • Handle: RePEc:eee:enepol:v:49:y:2012:i:c:p:274-287
    DOI: 10.1016/j.enpol.2012.06.019
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    References listed on IDEAS

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    Cited by:

    1. Luís Aguiar-Conraria & Maria Joana Soares & Rita Sousa, 2017. "California´s Carbon Market and Energy Prices: A Wavelet Analysis," NIPE Working Papers 13/2017, NIPE - Universidade do Minho.
    2. Wang, Richard & Hsu, Shu-Chien & Zheng, Saina & Chen, Jieh-Haur & Li, Xuran Ivan, 2020. "Renewable energy microgrids: Economic evaluation and decision making for government policies to contribute to affordable and clean energy," Applied Energy, Elsevier, vol. 274(C).
    3. Rita Sousa & Luís Francisco Aguiar-Conraria & Maria Joana Soares, 2014. "Carbon and Energy Prices: Surfing the Wavelets of California," NIPE Working Papers 19/2014, NIPE - Universidade do Minho.
    4. Ossenbrink, Jan & Finnsson, Sveinbjoern & Bening, Catharina R. & Hoffmann, Volker H., 2019. "Delineating policy mixes: Contrasting top-down and bottom-up approaches to the case of energy-storage policy in California," Research Policy, Elsevier, vol. 48(10).
    5. Lin, Boqiang & Wang, Siquan, 2023. "The performance of specialized and oriented diversified firms: A comparative analysis from the targeted expansion of renewable energy business of listed companies," International Review of Financial Analysis, Elsevier, vol. 89(C).
    6. Coffman, Makena & Wee, Sherilyn & Bonham, Carl & Salim, Germaine, 2016. "A policy analysis of Hawaii's solar tax credit," Renewable Energy, Elsevier, vol. 85(C), pages 1036-1043.
    7. Hayibo, Koami Soulemane & Pearce, Joshua M., 2021. "A review of the value of solar methodology with a case study of the U.S. VOS," Renewable and Sustainable Energy Reviews, Elsevier, vol. 137(C).
    8. Chen, Zhisong & Su, Shong-Iee Ivan, 2014. "Photovoltaic supply chain coordination with strategic consumers in China," Renewable Energy, Elsevier, vol. 68(C), pages 236-244.

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