Market Acceptance of Renewable Energy Technologies for Power Generation

The perception of climate change as an emergency has provided the primary impetus to a transition from conventional fossil-based energy sources to renewables. The use of renewable energy sources is essential to sustainable development, since it is the only way that quality of life can remain high while greenhouse gas emissions are cut. Still, at the time of writing, renewables contribute a small part of the total primary energy use worldwide. Much research has gone into understanding barriers to the full-scale adoption of renewable energy sources. Still, many of the tools used have focused primarily on optimal paths, which are useful in the long-term but problematic in non-equilibrium markets. In the shorter term, behavior is thought to be more governed by existing institutions and commitments until those frameworks can be changed. This means that understanding people's attitudes towards renewables is key towards understanding how adoption will take place and how best to incentivize such action. Particularly, decisions are made by investors, who serve as intermediaries between what customers/public want and the existing institutions (what is possible). Understanding their responses to the current state of affairs as well as perturbations in the form of policy changes is important in order to effect change or make sure that policies will work as intended.

First, the shifting demand landscape is considered, specifically in Indiana cities. Heating is shrinking as a driver of primary energy use over time due to climate change, while transport increases relatively. Electricity demand continues to increase, and the potential for electrification of transport can add to this potential. This led to a focus on the electricity sector for further work. Noticing that adoption lags public support led to a comparison of levelized cost of electricity and net present value metrics for 18 dominant technologies in two power markets in the US. Capacity markets and solar renewable energy credits lead to differences between cost and net present value in PJM, making natural gas the most attractive technology there. Noting the difference in electricity price between the two markets also provides a caution regarding the employment of carbon pricing in PJM, since that is an additional cost to the consumer who is already paying twice to fossil based generation in that region, once for energy provision and once for reliability.

Individual technologies represent only part of the question, however, since generation capacity is added to bolster existing supplies. In order to study the portfolio, historical risk is considered along with levelized costs to identify optimal portfolios in CAISO and PJM. Then electricity is treated as a social good, and a sustainability profile was built for each technology balancing current equity and risks to future generations. This allowed quantification and identification of barriers to market acceptance of renewables, but it also led to a recognition of where useful metrics are still lacking. For example the use of land provides an important barrier to the adoption of renewables, and is a potent potential barrier for future acceptance. It is not well understood, however, which led to a critical review of existing technologies.

The work in this dissertation provides one of the first mixed methods attempts to assess energy demand for cities including the end use of cooling. It provides a simple model that demonstrates the importance of capacity markets in determining the profitability of different energy technologies. It provides a guide to the emerging issue of land use by energy systems, a key consideration for the study of the food-energy-water nexus. It is the first use of portfolio optimization for sustainability studies. This is an important methodological tool since it allows a comprehensive sustainability analysis while providing a sense of the difference between immediate and future risks. The tool also allows users to diagnose which technologies are incentivized and which are deterred by market factors, as well as the strength of the deterrence. This is helpful for policy makers in understanding how incentives should be structured.