Energy transitions in regulated markets | Ashley Langer

Ashley Langer is an Associate Professor of Economics at the University of Arizona in Tucson and a Research Associate of the National Bureau of Economic Research. Her primary research fields are environmental and energy economics and empirical industrial organisation.

Ashley will present the paper ‘Energy Transitions In Regulated Markets’ by Gautam Gowrisankaran, Mar Reguant and Ashley Langer

Abstract:

Natural gas has replaced coal as the dominant fuel for U.S. electricity generation. However, U.S. states that regulate electric utilities have retired coal more slowly than others. We build a structural model of rate-of-return regulation during an energy transition where utilities face trade-offs between lowering costs and maintaining coal capacity. We find that the current regulatory structure retires only 45% as much coal capacity as a cost minimizer. A regulated utility facing a carbon tax does not lower carbon emissions immediately but retires coal similarly to the social planner. Alternative regulations with faster transitions clash with affordability and reliability goals.