Publication:
Impact of electricity pricing policies on renewable energy investments and carbon emissions

dc.contributor.coauthorShang, Kevin
dc.contributor.coauthorYücel, Şafak
dc.contributor.departmentDepartment of Business Administration
dc.contributor.kuauthorKök, Abdullah Gürhan
dc.contributor.schoolcollegeinstituteCollege of Administrative Sciences and Economics
dc.date.accessioned2024-11-09T22:59:25Z
dc.date.issued2018
dc.description.abstractWe investigate the impact of pricing policies (i.e., flat pricing versus peak pricing) on the investment levels of a utility firm in two competing energy sources (renewable and conventional), with a focus on the renewable investment level. We consider generation patterns and intermittency of solar and wind energy in relation to the electricity demand throughout a day. Industry experts generally promote peak pricing policy as it smoothens the demand and reduces inefficiencies in the supply system. We find that the same pricing policy may lead to distinct outcomes for different renewable energy sources due to their generation patterns. Specifically, flat pricing leads to a higher investment level for solar energy, and it can lead to still more investments in wind energy if a considerable amount of wind energy is generated throughout the day. We validate these results by using electricity generation and demand data of the state of Texas. We also show that flat pricing can lead to substantially lower carbon emissions and a higher consumer surplus. Finally, we explore the effect of direct (e.g., tax credit) and indirect (e.g., carbon tax) subsidies on investment levels and carbon emissions. We show that both types of subsidies generally lead to a lower emission level but that indirect subsidies may result in lower renewable energy investments. Our study suggests that reducing carbon emissions through increasing renewable energy investments requires careful attention to the pricing policy and the market characteristics of each region.
dc.description.indexedbyWOS
dc.description.indexedbyScopus
dc.description.issue1
dc.description.openaccessYES
dc.description.publisherscopeInternational
dc.description.sponsoredbyTubitakEuN/A
dc.description.volume64
dc.identifier.doi10.1287/mnsc.2016.2576
dc.identifier.eissn1526-5501
dc.identifier.issn0025-1909
dc.identifier.quartileQ1
dc.identifier.scopus2-s2.0-85041412048
dc.identifier.urihttps://doi.org/10.1287/mnsc.2016.2576
dc.identifier.urihttps://hdl.handle.net/20.500.14288/7877
dc.identifier.wos426190800009
dc.keywordsRenewable energy investment
dc.keywordsElectricity pricing policies
dc.keywordsCarbon emissions
dc.language.isoeng
dc.publisherThe Institute for Operations Research and the Management Sciences (INFORMS)
dc.relation.ispartofManagement Science
dc.subjectManagement
dc.subjectOperations research
dc.subjectManagement science
dc.titleImpact of electricity pricing policies on renewable energy investments and carbon emissions
dc.typeJournal Article
dspace.entity.typePublication
local.contributor.kuauthorKök, Abdullah Gürhan
local.publication.orgunit1College of Administrative Sciences and Economics
local.publication.orgunit2Department of Business Administration
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