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Technology Choices in the U.S. Electricity Industry before and after Market Restructuring

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  • Zsuzsanna Csereklyei
  • David I. Stern

Abstract

We study the drivers of the adoption of electricity generation technologies between 1970 and 2014 in the lower 48 U.S. states. Since the 1990s, major electricity market restructuring took place in some parts of the United States. We explore the implications of changing from a regulated “cost-of-service†, or rate of return, system to liberalized wholesale electricity markets on technology and fuel choices.We find that wholesale market restructuring resulted in significant immediate investment in various natural gas technologies due to higher expected profits, and a reduction in coal investments. In states that adopted liberalized wholesale electricity markets, higher natural gas price expectations resulted in more investment in coal and renewable technologies, while higher coal price expectations resulted in lower coal-fired baseload power investments. Natural gas price expectations, therefore, have the potential to significantly shape the power generation landscape of the futur

Suggested Citation

  • Zsuzsanna Csereklyei & David I. Stern, 2018. "Technology Choices in the U.S. Electricity Industry before and after Market Restructuring," The Energy Journal, , vol. 39(5), pages 157-182, September.
    • Handle: RePEc:sae:enejou:v:39:y:2018:i:5:p:157-182
    DOI: 10.5547/01956574.39.5.zcse
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    1. Kira R. Fabrizio & Nancy L. Rose & Catherine D. Wolfram, 2007. "Do Markets Reduce Costs? Assessing the Impact of Regulatory Restructuring on US Electric Generation Efficiency," American Economic Review, American Economic Association, vol. 97(4), pages 1250-1277, September.
    2. J. Dean Craig and Scott J. Savage, 2013. "Market Restructuring, Competition and the Efficiency of Electricity Generation: Plant-level Evidence from the United States 1996 to 2006," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1).
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Two New Working Papers
      by noreply@blogger.com (David Stern) in Stochastic Trend on 2017-03-23 06:25:00
    2. Annual Review 2017
      by noreply@blogger.com (David Stern) in Stochastic Trend on 2017-12-28 02:26:00
    3. Annual Review 2018
      by noreply@blogger.com (David Stern) in Stochastic Trend on 2018-12-23 02:35:00

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    Cited by:

    1. Csereklyei, Zsuzsanna & Qu, Songze & Ancev, Tihomir, 2019. "The effect of wind and solar power generation on wholesale electricity prices in Australia," Energy Policy, Elsevier, vol. 131(C), pages 358-369.
    2. Csereklyei, Zsuzsanna & Anantharama, Nandini & Kallies, Anne, 2021. "Electricity market transitions in Australia: Evidence using model-based clustering," Energy Economics, Elsevier, vol. 103(C).

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    More about this item

    Keywords

    Technology choices; Electricity industry; Market restructuring;
    All these keywords.

    JEL classification:

    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General

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