Changes in Renewable Energy Demand: A look at the Renewable Energy Electricity Demand Portfolio

Changes in Renewable Energy Demand: A look at the Renewable Energy Electricity Demand PortfolioBy Melissa Lynes PhD Candidate Department of Agricultural Economics Kansas State University Manhattan, KS, USAPartial funding provided by the USDA, NIFA National Needs Fellowship Program

Push for more renewable energiesAs of 2011, renewable energy accounted for 11% of total energy production

Different governmental agencies have set goals and made predictions to how much renewable energy the US should be producing20% wind energy by 2030 Department of Energy85% clean energy sources by 2035 President Barack Obama16% renewable energy by 2040 International Energy Agency

These policies have helped shaped the use of renewable energiesPurpose of this PresentationTo determine the demand for electricity produced from each of the five main types of renewable energy: hydroelectric, geothermal, biomass, wind, and solar/photovoltaic (PV) power

And to determine how the political and social environment affects the demand for renewable energyDemand ModelA system of demand equations was estimated simaltaneously to determine the demand for each type of renewable energyOne equation was dropped so the models would estimate

A Political and Social Environment (PSE) index was created in place of prices for renewable energy

Demand ModelData SetPanel data set for each type of renewable energy1984 2010 All 50 states plus Washington D.C.

State level population and per capita income

Year dummy variables were includedPolitical and social environmental indexThe Political and Social Environmental IndexNameDecreases Total Index ByVaries AcrossDescriptionMandatory Public Benefit Fund1State, time, renewable energyDeveloped to help ensure continued support of renewable energy and typically funded through small surchargesVoluntary Public Benefit Fund0.5State, time, renewable energySimilar to the mandatory Public Benefit Fund but consumers choose to pay into the fundsRenewable Portfolio Standard1State, timeThere is a mandatory Renewable Portfolio Standard in place for any type of renewable energyVoluntary Renewable Portfolio Standard0.5State, timeSimilar to the mandatory renewable energy standard, except that utility companies do not have to meet any standardsRenewable Portfolio Standard per type of renewable energy1State, time, renewable energyIf that particular type of renewable energy can be used to reach the renewable portfolio standardRenewable Portfolio Standard renewable energy specific 1State, time, renewable energyIf the Renewable Portfolio Standard includes a special requirement or incentive for that type of renewable energyRenewable Portfolio Standard In-state1State, time, renewable energyIf there are special requirements or incentives for producing the renewable energy in the state where electricity is soldNet Metering1State, time, renewable energyAllows consumers to sell to the grid if they produce one of the state specific types of renewable energyGreen Power Purchasing Policies1State, time, renewable energyAllows consumers to pay more for their electricity to ensure a specified amount of electricity is from renewable energyProduction Tax Credit1Time, renewable energyIf there is a production tax credit available 8ResultsNote: * denotes statistical significance at the 10% level, ** denotes statistical significance at the 5% level, and *** denotes statistical significance at the 1% level.Compensated Political and Social Environment ElasticitiesHydroelectricBiomass Wood and WasteGeothermalSolar / PVWindOwn Compensated Elasticity-0.42457-2.0077-1.42417-3.08797-0.30553Hydroelectric and wind energy are both greater than -1 indicating that political will is not showing up strong for theseHydroelectric power may already be close to capacityThe political and social environment is already highest for wind so increasing the policies may not increase capacity by muchIncreasing the political will for biomass wood and waste, geothermal, and solar/PV may greatly increase the demand of these

Political Capacity ElasticitiesHydroelectricBiomass Wood and WasteGeothermalSolar / PVWindPolitical Capacity Elasticity1.00010.9995441.0035071.0068440.998945All of these are essentially one indicating that as the total political capacity increases all of the renewable energies similarly

Conclusions and future workA better political and social environment helps lead to an increase in demand for all types of renewable energyHowever, increasing policies relating to wood waste and biomass, geothermal, and solar energy will likely have greater results than increasing wind or hydroelectric related policies

Increasing the overall political capacity results in similar results for all types of renewable energy

Test the validity of the PSE indexQuestions or commentsThe Political and Social Environment IndexIn 1984, the PSE was close to eight for all types of renewable energies (when averaged across all states)The index decreased to range between 3.6 and 4.4 by 2010The most dramatic decreases coming in the 2000sWind has the lowest PSE indexThe first Renewable Portfolio Standard was enacted in Iowa in 1983The first Public Benefit Fund were enacted in California and Pennsylvania in 1996As of 2010:30 states had mandatory Renewable Portfolio Standard in place7 states had voluntary Renewable Portfolio Standard in place22 states were suppose to be meeting some level of target19 states had mandatory or voluntary Public Benefit Fund in placeAll but 7 states have net metering in place7 states gave their consumers the option to purchase specified amounts of renewable energyelasticities