Materials for Adler & Kiesling research on effects of ZECs
Abstract: Nuclear power plants are facing financial challenges in competitive wholesale power markets due to three coinciding factors in the mid-2000s: falling natural gas prices and increased natural gas generation capacity, increases in wind generation capacity arising from renewable portfolio standard (RPS) regulations, and stagnant electricity demand. New York and Illinois have implemented new regulations requiring utilities and load-serving entities to purchase Zero Emission Credits (ZECs), with proceeds returned as revenue to participating nuclear power plants. We use a difference-in-differences regression analysis to examine ZEC program effects on generation, wholesale and retail prices, and air quality. We find that nuclear generation increased in both states as a result of the ZEC programs, increasing renewable generation in Illinois and reducing coal generation in New York. Wholesale prices fell in both states, and retail prices fell slightly in Illinois and rose in New York. Finally, we find local air quality improvements in both states, as well as a significant short-run decrease in carbon dioxide emissions in New York.
This repository contains the most recent working paper version, the online appendix to the paper, and the data and Stata files used in the analysis.