Booth Research Analyzes Renewable Energy
New research via University of Chicago Booth School of Business Professor John R. Birge and German researchers, Ingmar Ritzenhofen and Professor Stefan Spinler of the WHU-Otto Beisheim School of Management, have comprehensively analyzed the various schemes to support renewable energy generation and find ways to reduce carbon emissions as well as end fossil fuel dependence.
The papers, “The Structural Impact of Renewable Portfolio Standards and Feed-In-Tariffs on Electricity Markets” and “In Robustness of Renewable Energy Support Schemes Facing Uncertainty and Regulatory Ambiguity,” use the California electricity market to test various subsidies and support arrangements and then expand to include the ambiguities faced by policymakers.
Renewable energies are on a huge upswing– In 2013, new investments into renewable power sources totaled $214 billion worldwide, which is up from $40 billion in 2004. Policymakers must now figure out how to approach spending on renewable energy expansion and how to best achieve the larger goals of energy affordability, supply security and sustainability. To find these answers the researchers tested various programs for efficacy and robustness against uncertain regulatory and economic environments, finding that all of them have succeeded in increasing renewable power supply and reducing carbon emissions. Tariffs and premium payments are often the lowest cost solutions but quotas tend to generate more predictable long term results both in terms of renewable energy adoption and long-term investment. Because, to varying degrees, tariffs and premium payments distort markets by ignoring prevailing prices, the potential for over- and under-investment is great over longer periods of time.
When taken together, the two papers offer policymakers a framework for decision-making by identifying the short and long term tradeoffs implicit in each arrangement and by suggesting that a system of Renewable Portfolio Standards might provide the most robust long-term supply of renewable energy sources, even in a changing economic and regulatory environment.
You can find the original press release here.
About the Author
Max Pulcini
Max Pulcini is a Philadelphia-based writer and reporter. He has an affinity for Philly sports teams, Super Smash Bros. and cured meats and cheeses. Max has written for Philadelphia-based publications such as Spirit News, Philadelphia City Paper, and Billy Penn, as well as national news outlets like The Daily Beast.
