Renewable Portfolio Standards and the Growth of Wind Power Capacity in the United States
RENEWABLE PORTFOLIO STANDARDS AND THE GROWTH OF WIND POWER CAPACITY IN THE UNITED STATES Andrew M. MacBride, B.A. Thesis Advisor: David E. Hunger, Ph.D. ABSTRACT Of existing renewable energy sources, wind power has experienced the most commercial success, to date, and in many regions of the country is economically competitive with conventional energy generated from fossil fuels. In the United States, the federal and state governments have supported the development and commercialization of wind power through various policies, one of which is a Renewable Portfolio Standard (RPS). An RPS establishes timeframes by which a state must generate set percentages of their electricity from renewable resources. By mandating the use of renewable energy, an RPS promotes the development of wind power capacity. There are numerous factors, however, that help to explain the proliferation of wind power capacity in the United States. Alternative policies such as the federal Production Tax Credit and the Public Benefits Funds established by states also aim to hasten the development of renewables like wind power. Market factors such as fossil fuel prices, the cost and availability of wind turbines, and average electricity prices also affect the pace of wind power development. Understanding which factors have the greatest effect on wind capacity in the U.S. is valuable to both policy-makers and private investors. Renewable Portfolio Standards are an increasingly popular policy mechanism at the state level and a national RPS has been proposed in most of the energy bills drafted by the 110th Congress. Once enacted, Renewable Portfolio Standards lock energy providers into long-term requirements, the economic effects of which can not yet be fully understood. By requiring energy providers to incorporate renewable energy sources into their portfolios, states are placing a considerable financial burden on these energy providers, and their customers. With such high costs, the effectiveness of a Renewable Portfolio Standard as a catalyst for the development of renewable energy must be examined. If RPS policies are not as effective at promoting renewable energy as most governmental and academic literature purport, or if there are other forces more directly causing the growth of alternatives such as wind power capacity, there may be more efficient means of fostering investment in renewable energy. The purpose of this study is to determine the effect that state Renewable Portfolio Standards have on wind power capacity in the United States, controlling for alternative policy options and economic factors.
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