CHANGES IN RENEWABLE ENERGY DEMAND: A LOOK AT THE RENEWABLE ENERGY ELECTRICITY DEMAND PORTFOLIO By Melissa Lynes PhD Candidate Department of Agricultural Economics Kansas State University Manhattan, KS, USA Partial funding provided by the USDA, NIFA National Needs Fellowship Program

PUSH FOR MORE RENEWABLE ENERGIES  As 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 producing  20% wind energy by 2030 – Department of Energy  85% clean energy sources by 2035 – President Barack Obama  16% renewable energy by 2040 – International Energy Agency  These policies have helped shaped the use of renewable energies

PURPOSE OF THIS PRESENTATION  To 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 energy

DEMAND MODEL  A system of demand equations was estimated simaltaneously to determine the demand for each type of renewable energy  One 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 MODEL

DATA SET  Panel data set for each type of renewable energy  1984 – 2010  All 50 states plus Washington D.C.  State level population and per capita income  Year dummy variables were included

POLITICAL AND SOCIAL ENVIRONMENTAL INDEX

THE POLITICAL AND SOCIAL ENVIRONMENTAL INDEX Name Decreases Total Index By Varies AcrossDescription Mandatory Public Benefit Fund 1 State, time, renewable energy Developed to help ensure continued support of renewable energy and typically funded through small surcharges Voluntary Public Benefit Fund 0.5 State, time, renewable energy Similar to the mandatory Public Benefit Fund but consumers choose to pay into the funds Renewable Portfolio Standard 1State, time There is a mandatory Renewable Portfolio Standard in place for any type of renewable energy Voluntary Renewable Portfolio Standard 0.5State, time Similar to the mandatory renewable energy standard, except that utility companies do not have to meet any standards Renewable Portfolio Standard – per type of renewable energy 1 State, time, renewable energy If that particular type of renewable energy can be used to reach the renewable portfolio standard Renewable Portfolio Standard – renewable energy specific 1 State, time, renewable energy If the Renewable Portfolio Standard includes a special requirement or incentive for that type of renewable energy Renewable Portfolio Standard – In-state 1 State, time, renewable energy If there are special requirements or incentives for producing the renewable energy in the state where electricity is sold Net Metering1 State, time, renewable energy Allows consumers to sell to the grid if they produce one of the state specific types of renewable energy Green Power Purchasing Policies 1 State, time, renewable energy Allows consumers to pay more for their electricity to ensure a specified amount of electricity is from renewable energy Production Tax Credit 1 Time, renewable energy If there is a production tax credit available

RESULTS ParameterHydroelectric Biomass Wood and Waste GeothermalSolar / PVWind Constant *** (0.2641) (0.2533) (0.0668) (0.1333) ( ) * ( ) *** ( ) ** ( ) (0.0758) *** (0.0683) *** (0.0120) * ( ) *** (0.0237) *** (0.0683) *** (0.0683) * (0.0114) ( ) (0.0218) *** (0.0120) * (0.0114) ** ( ) *** ( ) *** ( ) * ( ) ( ) *** ( ) ** ( ) *** (0.0237) (0.0218) *** ( ) ** ( ) ** (0.0141) Log(Population) (0.0101) ( ) ( ) ( ) Log(Per Capita Income) (0.0238) (0.0229) ( ) (0.0120) Note: * 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 ELASTICITIES Hydroelectric Biomass Wood and Waste GeothermalSolar / PVWind Own Compensated Elasticity  Hydroelectric and wind energy are both greater than -1 indicating that political will is not showing up strong for these  Hydroelectric power may already be close to capacity  The political and social environment is already highest for wind so increasing the policies may not increase capacity by much  Increasing the political will for biomass wood and waste, geothermal, and solar/PV may greatly increase the demand of these

POLITICAL CAPACITY ELASTICITIES Hydroelectric Biomass Wood and Waste GeothermalSolar / PVWind Political Capacity Elasticity  All of these are essentially one indicating that as the total political capacity increases all of the renewable energies similarly

CONCLUSIONS AND FUTURE WORK  A better political and social environment helps lead to an increase in demand for all types of renewable energy  However, 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 index

QUESTIONS OR COMMENTS

THE POLITICAL AND SOCIAL ENVIRONMENT INDEX  In 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 2010  The most dramatic decreases coming in the 2000s  Wind has the lowest PSE index  The first Renewable Portfolio Standard was enacted in Iowa in 1983  The first Public Benefit Fund were enacted in California and Pennsylvania in 1996  As of 2010:  30 states had mandatory Renewable Portfolio Standard in place  7 states had voluntary Renewable Portfolio Standard in place  22 states were suppose to be meeting some level of target  19 states had mandatory or voluntary Public Benefit Fund in place  All but 7 states have net metering in place  7 states gave their consumers the option to purchase specified amounts of renewable energy

ELASTICITIES