Abstract
This paper examines the impacts of uncertainties in U.S. renewable energy policy on the investment decisions of renewable electricity producers. We develop and solve a dynamic optimization model to understand how investment in wind energy depends on market and policy uncertainties. These uncertainties include the federal government's uncertain decision about the continuation of the Production Tax Credit (PTC) policy and the stochasticity of prices in the market for Renewable Electricity Credits (RECs). Our results show that investors require higher REC prices to invest without the PTC policy. Results contribute to our understanding of how policy uncertainty affects the profitability threshold required for investors to commit to renewable energy projects.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 64-71 |
| Number of pages | 8 |
| Journal | Electricity Journal |
| Volume | 29 |
| Issue number | 3 |
| DOIs | |
| State | Published - Apr 2016 |
Bibliographical note
Publisher Copyright:© 2015 Elsevier Inc.
UN SDGs
This output contributes to the following UN Sustainable Development Goals (SDGs)
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SDG 7 Affordable and Clean Energy -
SDG 13 Climate Action
Keywords
- Energy policy
- Investment
- Real options
- Uncertainty
- Wind energy
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