The impacts of renewable energy policies on renewable energy sources for electricity generating capacity

Electricity generation from non-hydro renewable sources has increased rapidly in the last decade. For example, Renewable Energy Sources for Electricity (RES-E) generating capacity in the U.S. almost doubled for the last three year from 2009 to 2012. Multiple papers point out that RES-E policies implemented by state governments play a crucial role in increasing RES-E generation or capacity. This study examines the effects of state RES-E policies on state RES-E generating capacity, using a fixed effects model. The research employs panel data from the 50 states and the District of Columbia, for the period 1990 to 2011, and uses a two-stage approach to control endogeneity embedded in the policies adopted by state governments, and a Prais-Winsten estimator to fix any autocorrelation in the panel data. The analysis finds that Renewable Portfolio Standards (RPS) and Net-metering are significantly and positively associated with RES-E generating capacity, but neither Public Benefit Funds nor the Mandatory Green Power Option has a statistically significant relation to RES-E generating capacity. Results of the two-stage model are quite different from models which do not employ predicted policy variables. Analysis using non-predicted variables finds that RPS and Net-metering policy are statistically insignificant and negatively associated with RES-E generating capacity. On the other hand, Green Energy Purchasing policy is insignificant in the two-stage model, but significant in the model without predicted values.