IDEAS home Printed from https://ideas.repec.org/p/ehl/lserod/66442.html
   My bibliography  Save this paper

Where does the wind blow? Green preferences and spatial misallocation in renewable energy sector

Author

Listed:
  • Lin, Yatang

Abstract

Are "greener" investments less efficient? This paper looks at the location choices by wind power investors. I measures the efficiency loss in this sector due to wrong project location and explore the factors contributing to it. Using extensive information on wind resources, transmission, electricity price and other restrictions that might affect the siting of wind farms, I calculate the predicted profitability of wind power projects for all the possible places across the contiguous US, use it as a counterfactual for profit- maximizing wind power investment and compare it to the actual placement of wind farms. Average predicted profit of wind projects will raise by 47.1% had the 1770 current projects in the continental US been moved to the best 1770 sites. It is also shown that 80% and 42% of this observed deviation can be accounted for by within- state and within-county distortion. I show further evidence that a large proportion of the within-state and within-county spatial misallocation in wind farm siting can be attributable to green investors' “conspicuous generation” behaviour: wind farms in more environmental-friendly counties are more likely to be invested by local and non- profit investors, are closer to cities, are much less responsive to local fundamentals and have significant worse performance ex-post. Surprisingly, the implementation of state policies such as Renewable Portfolio Standard (RPS) and price-based subsidies are related to better within-state locational choices by adding more capacities in the “brown” counties and attract more for-profit investments, leading to improved observed efficiency, while lump-sum subsidies have the opposite or no effects. These findings calls for the attention from policy makers to the non-monetary incentives of renewable investors when determining the allocative efficiency of policies.

Suggested Citation

  • Lin, Yatang, 2016. "Where does the wind blow? Green preferences and spatial misallocation in renewable energy sector," LSE Research Online Documents on Economics 66442, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:66442
    as

    Download full text from publisher

    File URL: http://eprints.lse.ac.uk/66442/
    File Function: Open access version.
    Download Restriction: no

    More about this item

    Keywords

    Spatial misallocation; renewable energy policies; productivity; green preferences;

    JEL classification:

    • F37 - International Economics - - International Finance - - - International Finance Forecasting and Simulation: Models and Applications
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ehl:lserod:66442. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (LSERO Manager). General contact details of provider: http://edirc.repec.org/data/lsepsuk.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.