Munich Personal RePEc Archive

Do Mandatory U.S. State Renewable Portfolio Standards Increase Electricity Prices?

Wang, Hongbo (2014): Do Mandatory U.S. State Renewable Portfolio Standards Increase Electricity Prices? Forthcoming in: Growth and Change

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Abstract

Renewable Portfolio Standards (RPS) are U.S. state mandates that utilities produce some of their electricity using renewable energy sources in an effort to reduce greenhouse gas emissions. While advocates highlight the potential long-term benefits of RPS, critics argue that RPS will increase electricity prices due to the higher costs of renewable energy generation. However, to date, there are no published empirical studies of the effect of RPS on electricity prices. Using state-level panel data from 1990 to 2011 and the difference-in-differences (DID) method, I find that implementation increases electricity prices when the RPS policy first becomes binding.

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