Impact of competitive electricity market on renewable generation technology choice and policies in the United States

Market objectives based on private value judgments will conflict with social policy objectives toward environmental quality in an emerging restructured electricity industry. This might affect the choice of renewables in the future generation mix. The US electricity industry's long-term capacity planning and operations is simulated for alternative market paradigms to study this impact. The analysis indicates that the share of renewable energy generation sources would decrease and emissions would increase considerably in a more competitive industry, with greater impact occurring in a monopoly market. Alternative environmental policy options can overcome market failures and help achieve appropriate levels of renewable generation. An evaluation of these policies indicate their varying cost-effectiveness, with higher levels of intervention necessary if market power exists. (Author)