the renewables portfolio standard in texas an early assessment texas has rapidly emerged as one of the leading wind power markets in the united states this development can be largely traced to a well designed and carefully implemented renewables portfolio standard rps the rps is a new policy mechanism that has received increasing attention as an attractive approach to support renewable power generation though replacing existing renewable energy policies with an as of yet untested approach in the rps is risky early experience from texas suggests that an rps can effectively spur renewables development and encourage competition among renewable energy producers initial rps targets in texas were well exceeded by the end of 2001 with 915 mw of wind installed in that year alone rps compliance costs appear negligible with new wind projects reportedly contracted for well under 3 us cent k wh in part as a result of a 1 7 us cent kwh production tax credit an outstanding wind resource and an rps that is sizable enough to drive project economies of scale obliged retail suppliers have been willing to enter into long term contracts with renewable generators reducing important risks for both the developer and the retail supplier finally the country s first comprehensive renewable energy certificate program has been put into place to monitor and track rps compliance c 2002 published by elsevier science ltd less

support systems for the diffusion of renewable energy technologies an investor perspective concern over climate change impacts and the projected depletion of fossil fuels has urged more governments to adopt policies that stimulate the diffusion of renewable energy technologies ret with an increasingly diverse suite of support instruments the question emerges as to which instruments or combinations are able to achieve faster more substantial diffusion results although various support instruments were extensively addressed in policy studies there is still no consensus this is partly because many policy studies take a policy maker approach in comparing support instruments leaving relationships between policy design and policy results as a black box this paper proposes an investor oriented perspective to analyze the diffusion potential of support systems for ret the main argument is that it is not the type of support instrument but rather its risk profitability characteristics that influence investor behavior and the rate of diffusion the two instruments most frequently discussed and compared are the feed in tariff and the quota model the analysis in this paper concludes that policy design is crucial while often feed in tariffs are applauded and quota system feared feed in tariffs may also bring about disappointing diffusion results when poorly designed while quota systems may be also conceived as attractive instruments for independent power producers

do renewable electricity policies promote renewable electricity generation evidence from panel data using the poisson pseudo maximum likelihood estimation technique this paper evaluates the effects of renewable electricity policies on renewable electricity generation using a large panel dataset that covers 122 countries over the period of 1980 2010 the results suggest that renewable electricity policies play a crucial role in promoting renewable electricity generation but their effectiveness is subject to diminishing returns as the number of policies increases there is also evidence that the effects of renewable electricity policies are more pronounced before 1996 as well as in developed and emerging market countries and the negative policy interaction effect fades with the stage of economic development lastly policy effectiveness varies by the type of renewable electricity policy and energy source only investment incentives and feed in tariffs are found to be effective in promoting the development of all types of renewable energy sources for electricity considered in this paper

green electricity policies in the united states case study while there has been interest in promoting the use of renewable energy in electricity production for a number of years in the united states the market share of non hydro renewable energy sources in electricity production has remained at about 2 percent over the past decade the paper reviews the principal energy resources used for electricity production considers the changing regulatory environment for the electricity industry and describes government policies that have been used to promote green electricity in the united states with an emphasis on measures adopted by state governments factors influencing the development of green power markets are also discussed including underlying economic issues public policy measures the regulatory environment external costs and subsidies without significant increases in fossil fuel prices much more stringent environmental regulations or significant changes in electricity customer preferences green electricity markets are likely to develop slowly in the united states

towards a sustainable electrification in ghana a review of renewable energy deployment policies abstract ghana has been facing perennial power rationing over the years due to fuel supply challenges the country s energy system is likely to suffer additional strain from rising energy demand fueled by population growth rapid urbanization and economic development fortunately there are enormous renewable energy resources which can provide sustainable electrification as backbone to socioeconomic development while curbing global warming ghana s energy strategy targets 100 access to electricity and 10 share of sustainable power in national generation mix by 2020 despite the existence of numerous policies and a renewable energy act current contribution of non conventional renewable energy to electricity generation is less than 1 the right mix of policies to address the unique domestic conditions and achieve its specific development goals remains insufficient this study reviews the regulatory framework financing incentives and other provisions of ghana s renewable energy act it critically examines the policy s strengths weaknesses opportunities and treats based on comparative analysis and lessons drawn from failed and successful implementation of similar policies around the world the study also assesses the impact of policy on project development it was found that the performance of ghana s renewable energy policy on grid connected electricity has been poor compared to its target the fundamental reasons for this unsatisfactory performance may be attributed to partial implementation of policies lack of market driven support schemes lack of pricing policy framework weak grid network limited access to funds and inconsistencies in renewable energy development strategies this study proposes the following countermeasures i ghana should comprehensively harmonize renewable energy regulatory and fiscal policies with domestic electricity pricing regime ii market driven support schemes should be prioritized for cost effectiveness and minimum governmental influence these reforms can help eliminate some of the major barriers to sustainable electrification in ghana while the lessons provide a learning curve for other african countries

installed base and compatibility innovation product preannouncements and predation a good is often more valuable to any user the more others use compatible goods the authors show that this effect may inhibit innovation if an installed base exists and transition to a new standard must be gradual early adopters bear a disproportionate share of transient incompatibility costs this can produce excess inertia the installed base however is stranded if the new standard is adopted this may create excess momentum these dynamic effects have strategic implications temporary price cutting can permanently prevent entry and product preannouncements can be critical in innovation these strategic actions have ambiguous welfare effects

a market for renewable energy credits in the indian power sector abstract electricity generation from renewable energy sources in india has been promoted through a host of fiscal policies and preferential tariff for electricity produced from the same the fiscal policies include tax incentives and purchase of electricity generated through renewable energy sources the enactment of the electricity act 2003 the act has lent further support to renewable energy by stipulating purchase of a certain percentage of the power procurement by distribution utilities from renewable energy sources the renewable portfolio obligation as well as the feed in tariff for power procurement has been specified by a number of state electricity regulatory commissions sercs for the respective state under their jurisdiction a feed in tariff determined through a cost plus approach under a rate of return framework lacks incentive for cost minimisation and does not encourage optimal utilisation of renewable energy resources in the country such regulatory provisions differ across states the prevalent practice of fixing a renewable portfolio obligation along with cost based feed in tariffs disregards economic efficiency the paper proposes nationally tradable renewable energy credits scheme for achieving the targets set by the respective sercs as renewable portfolio obligation this would reduce the cost of compliance to a renewable portfolio obligation and would encourage efficient resource utilisation and investment in appropriate technologies the paper highlights its advantages and implementation issues this paper discusses regulatory developments for promotion of renewable energy in various indian states the paper also identifies a number of issues related to regulations concerning renewable portfolio obligation

rational bias in macroeconomic forecasts do professional forecasters provide their true unbiased estimates or do they behave strategically in our model forecasters have common information confer actively and thus know the true pdf of future outcomes intensive users of economic forecasts monitor forecasters performance closely occasional users are drawn to the forecaster who fared best in the previous period in the resulting nash equilibrium even though economists have identical expectations they make a range of projections that mimics the true probability distribution of the forecast variable those whose wages depend most on publicity produce forecasts that differ most from the consensus empirical evidence supports the model

the social efficiency of instruments of promotion of renewable energies a transaction cost perspective this paper compares the social efficiency of the regulatory instruments used to promote renewable energy sources in electricity generation taking into consideration their role in promoting the preservation of collective goods they are based on a purchase obligation and act either by price feed in tariffs or by quantity bidding for new res e capacities res e quotas from the public economics perspective the two instruments are distinct in terms of cost efficacy and market incentives in a world of imperfect information exchangeable quotas of green certificates are preferred because this instrument allows better control over consumer costs and whilst retaining market incentives transaction cost economics tce contributes to the assessment of these instruments by introducing res e investment safeguard as a major determinant of social efficiency and the instruments conformity to its institutional environment as a determinant of its viability in light of this additional consideration the arrangements between res e producers and obligated buyers inherent in each instrument are in fact quite similar either long term contracting or vertical integration we compare and assess res e price and quantity instruments on several dimensions from both the public economics and tce perspectives control of the cost for consumers safeguards of res e investments adaptability of the instrument in order to preserve its stability in the long run market incentive intensity and conformity with the new market regime of electricity industry it shows neither instruments offer an optimal solution in each of these dimensions the government will thus select an instrument in accordance with the relative importance of its objectives c 2006 elsevier b v all rights reserved

do favorable land price policy affect renewable energy industry evidence from photovoltaics abstract renewable energy is necessary for sustainable social and economic development this is particularly so with global energy shortages the continuous deterioration of ecosystems and the environment as well as the world population explosion this article qualitatively and quantitatively analyzes the effects and problems of chinese favorable land price policy on photovoltaics in examining the favorable land price policy in china this study develops a multiple linear regression model to study the effects of favorable land price policy on photovoltaic power and photovoltaic industry data used in this research was mainly collected from 20 provinces in china it is found that the development of pv in china has been greatly affected by the favorable land price policy in the end it is highly recommended that favorable land price policy should be continued for renewable energy systemic deficiencies can be overcome through continual reform and innovation of mechanisms

bidding strategy of virtual power plant for participating in energy and spinning reserve markets part i problem formulation this paper addresses the bidding problem faced by a virtual power plant vpp in a joint market of energy and spinning reserve service the proposed bidding strategy is a non equilibrium model based on the deterministic price based unit commitment pbuc which takes the supply demand balancing constraint and security constraints of vpp itself into account the presented model creates a single operating profile from a composite of the parameters characterizing each distributed energy resources der which is a component of vpp and incorporates network constraints into its description of the capabilities of the portfolio the presented model is a nonlinear mixed integer programming with inter temporal constraints and solved by genetic algorithm ga

implementing renewable energy portfolio standards the good the bad and the ugly in a two state comparison abstract understanding how household practices with regard to energy usage change and how to most effectively encourage the adoption of technologies that utilize renewable energy sources at the residential scale are important issues for addressing the environmental impacts of energy use here the social practices model spaargaren 2003 is applied to examine solar technology adopters in two u s states who were interviewed about adopting residential solar electric technology and specifically about their experiences with the rebate and incentive programs available to them examining the policies and interrogating their potentially unintended consequences from the perspective of the user sheds light on how residential solar incentive programs act as systems of provision shaping the practices of solar technology adopters in hopes of improving these incentive programs and effectively encouraging increased residential solar technology adoption findings suggest that feed in tariffs offer additional positive outcomes related to broadening the context for adoption and encouraging future energy conservation while size restrictions wholesale pricing in net metering agreements and inconsistent policy mechanisms across utilities in the same state all have potentially unintended negative consequences utilizing a perspective attentive to social practice offers a means of improving the design and implementation of energy policy

geographic attribution of an electricity system renewable energy target local economic social and environmental tradeoffs the 2014 intergovernmental panel on climate change ipcc report asserts that investment in low carbon electricity production will need to rise by several hundred billion dollars annually before 2030 in order to stabilize greenhouse gas concentrations in the atmosphere by 2100 in recognition of this urgent need to mitigate climate change many governments have already established policies to spur renewable energy investment in the electricity sector one such policy measure is a renewable energy target ret which sets a target percentage of electricity production to be generated from renewable sources by a specified date variations on this policy have been implemented around the world from the eu 20 20 20 to diverse renewable portfolio standards in u s states and municipalities this work analyzes economic environmental and social aspects of a geographic attribution i e isolated regional or country of an ret to gain insights on the associated tradeoffs in the case study of the azores islands portugal the regional geographic attribution of an ret captures the best of all three tradeoffs

a review on promoting share of renewable energy by green trading mechanisms in power system abstract in order to promote the development of renewable energy power generation many countries have issued corresponding policies meanwhile some green trading mechanisms have been implemented in power industry and this paper has mainly presented a review on promoting share of renewable energy by green trading mechanisms in power system with a focus on promotion effects of three mechanisms feed in tariff renewable portfolio standard and emission trading scheme apart from a review summaries comparisons and an outlook for future study are also presented our review suggests that feed in tariff and renewable portfolio standard can effectively increase the share of renewable energy power and lead to renewable resource diversity in addition emission trading also provides stimulus for development of renewable energy besides mitigation of carbon emission

the renewable portfolio standard design considerations and an implementation survey renewables have social and environmental bene ts compared to conventional electricity sources but are rarely competitive on a strict nancial cost basis this is because conventional sources are sometimes subsidized their full pollution costs are ignored and renewables involve newer higher cost technologies whose relative costs will fall with commercialization governments use several mechanisms to support renewables including direct nancial support grants loans indirect support r d demonstrations reform of nancial costs of conventional sources subsidy removal pollution taxes and the renewable portfolio standard rps the rps requires a minimum share of electricity from renewable energy sources its use is spreading because it maintains an incentive for renewable producers to reduce costs links the regulated market outcome to an environmental target and reduces government involvement although it is too early to evaluate fully its e ectiveness the survey for this study explored implementation issues in three european countries nine us states and australia and found the following the rps target is usually set to have environmental bene ts without causing signi cant price increases cost caps are sometimes used most jurisdictions limit eligibility to gridconnected domestic renewables the rps is usually applied to producers rather than consumers and to energy output not capacity flexibility mechanisms are desired but a challenge to implement administration in the us and australia is by government with delegation to independent utility regulators while in europe it is more the responsibility of government everywhere the rps is applied alongside other mechanisms of renewables support 2001 elsevier science ltd all rights reserved

a near rational model of the business cycle with wage and price inertia this paper presents a model in which insignificantly suboptimal behavior causes aggregate demand shocks to have significant real effects the individual loss to agents with inertial price wage behavior is second order in terms of the parameter describing the shock while the effect on real economic variables is first order thus significant changes in business activity can be generated by anticipated money supply changes provided that some agents are willing to engage in nonmaximizing behavior which results in small losses

rational expectations in the aggregate this paper investigates the relationship between the way rational expectations is employed in practice and the argument initially put forth to justify its use in practice rational expectations has meant that the expectations of each agent taken separately is consistent with the predictions of the theory this is different than the argument frequently used by proponents of rational expectations that on an aggregate level expectations should be consistent with the theory the primary findings are that standard and aggregate rational expectations typically yield systematically different equilibria and that the size of the difference depends positively on the degree of synergism

renewable energy policy and electricity restructuring a california case study abstract many countries are in the process of deregulating and restructuring their electric power industries although the introduction of retail competition may have negative impacts on the development of renewable energy a number of countries are establishing new programs to support these clean energy technologies in the united states debate has centered on three primary renewables support mechanisms 1 the renewables portfolio standard 2 programs funded by an electricity distribution surcharge and 3 voluntary renewable energy purchases by electricity customers via green power marketing california provides a good case study of the design of renewables support programs within industry restructuring because policymakers considered all three of these options during the state s restructuring proceedings moreover many of the same policy options design issues and political conflicts that have arisen in california are likely to recur in other states and countries some of the most important lessons from the california experience include 1 renewable energy and environmental advocates must clearly articulate the need and rationale for continued support of renewables 2 cost containment and competitive neutrality concerns must be addressed head on 3 combinations of policies are likely to be far more effective than any single renewables policy and 4 the effectiveness of renewable energy policies developed during the restructuring process will be strongly linked to their duration and stability

time frequency causality and connectedness between international prices of energy food industry agriculture and metals abstract this study analyzes the lead lag relationship between the price indices of energy fuels and each of food industrial inputs agriculture raw materials metals and beverages in the time frequency domain to this end we first use the wavelet coherency and phase differences next we use the diebold and yilmaz 2012 and barunik and krehlik 2017 spillover indices to analyse the connectedness among the set of the price indices under consideration the period of the study is 1990m1 to 2017m5 the wavelet coherency results reveal that there are important and significant relations between the fuel and food prices the fuel and industrial prices and the fuel and metal prices these results also show that there are phase relationships between those paired prices the volatility spillover results indicate that the agricultural sector is the most affected by shocks from the other markets the return series of the industrial input prices at all frequencies appears to be the main source of volatility transmission to the prices of the other commodities over the whole period this finding underlines the relevance of the industrial inputs to policy makers particularly when they design policies to provide incentives related to industrial production

technology adoption in the presence of network externalities we analyze technology adoption in industries where network externalities are significant the pattern of adoption depends on whether technologies are sponsored a sponsor is an entity that has property rights to the technology and hence is willing to make investments to promote it key findings include the following 1 compatibility tends to be undersupplied by the market but excessive standardization can occur 2 in the absence of sponsors the technology superior today has a strategic advantage and is likely to dominate the market 3 when one of two rival technologies is sponsored that technology has a strategic advantage and may be adopted even if it is inferior 4 when two competing technologies both are sponsored the technology that will be superior tomorrow has a strategic advantage

limited rationality and strategic complements the implications for macroeconomics this paper considers the implications of heterogeneity in information processing abilities for macroeconomic models that exhibit strategic complements the latter is the same concept that has received much attention in the recent macro literature under the headings keynesian coordination problems and positive trading externalities we consider environments in which agents vary in terms of their ability to form expectations and ask whether it is the sophisticated agents or the naive agents who have a disproportionately large effect on macroeconomic equilibrium we find that if macroeconomic interaction exhibits strategic complementarity then it is the naive agents who have a disproportionate impact

sustainability guided promotion of renewable electricity generation in recent years the threat of global climate change high fuel import dependence and rapidly rising electricity demand levels have intensified the quest for more sustainable energy systems this in turn has increased the need for policy makers to promote electricity generation from renewable energy sources guaranteed prices coupled with a buy back obligation for electricity fed into the grid is a popular renewables promotion instrument especially in europe more recently driven mainly by electricity market liberalisation efforts quota targets for the share of renewables in combination with tradable green certificates tgc have received considerable attention tgc offer a greater theoretical potential for economic efficiency gains due to price competition and the greater flexibility assigned to the obliged parties while guaranteed prices and tgc schemes support the operation of renewable energy technology systems bidding schemes for renewable energy generation capacity are used to raise economic efficiency on the plant construction side all of these policy instruments suffer from the shortcoming that they do not explicitly account for the often widely varying environmental social and economic impacts of the technologies concerned in this paper we propose a methodology for the design of renewable energy policy instruments that is based on integrated assessment in particular we argue that using participatory multicriteria evaluation as part of the design of renewable energy promotion policies would make it possible 1 to differentiate the level of promotion in a systematic and transparent manner according to their socio ecological economic impact and 2 to explicitly account for the preferences of stakeholders a further problem of existing tgc and bidding schemes is that diversity of supply could be severely diminished if few low cost technologies were allowed to dominate the renewable energy market to ensure a certain diversity of technologies our scheme suggests the use of different technology bands for technologies that are relatively homogeneous with respect to their maturity

feed in tariff vs renewable portfolio standard an empirical test of their relative effectiveness in promoting wind capacity development abstract this paper examines the relative effectiveness of feed in tariff fit and renewable portfolio standard rps in promoting wind capacity development using panel data conservative estimates suggest that on average across countries fit increases total wind capacity more than rps by a magnitude of about 1800 mw when using time variant policy indicators the difference between the two policies increases to nearly 2000 mw roughly 8 of 2009 cumulative capacity in germany as for annual wind capacity since 2005 this paper has found no significant difference between fit and rps it is also found that wind energy development responds to high electricity demand and high oil dependence

renewable electricity as a differentiated good the case of the republic of korea this paper examines the willingness for korean consumers to pay a premium for renewable electricity under a differentiated good framework by applying the contingent valuation method korean consumers have been required to pay for their use of renewable electricity as of 2012 first we find that korean consumers recognise renewable electricity as a differentiated good from traditional electricity generated from fossil fuels or nuclear energy the mean willingness to pay to use renewable electricity is usd 1 26 per month second we confirm the existence of perfect substitution relationships among variant renewable technologies which suggests that korean consumers do not perceive them as differentiated goods one reason for this perception is that korean consumers are more inclined to favour economic feasibility over sustainability or the availability of the resource stock when choosing between renewable technology types in sum we can say that korean consumers recognise renewable electricity as a differentiated good but that they do not differentiate between variant renewable technologies thus the imposition of the cost of renewable electricity on consumers in the form of increased electricity charges would be acceptable to consumers as long as any price rise properly reflects their preferences

imports as a major complication liberalisation of the green electricity market in the netherlands abstract liberalisation of the green electricity market in the netherlands has proceeded in a context of relatively generous fiscal incentives and in line with the position that demand is the limiting factor to dutch green electricity production the main result was a massive rise of imports partly covered by renewable energy credits and partly virtual in nature whereas the domestic expansion of green electricity production remained limited this shows the importance of a supply side focus in designing policies aimed at the expansion of domestic green electricity production in the context of a common market with different incentives in place

assessment of korean customers willingness to pay with rps abstract to increase the use of renewable energy the korean government will introduce the renewable portfolio standard rps in 2012 the rps places responsibility for extra renewable energy costs on the consumers and allows price competition among different renewable sources accordingly this study analyzes through the contingent valuation cv the willingness of korean households to pay more for electricity generated by wind photovoltaic pv and hydropower our empirical results show that although the willingness to pay or wtp was highest for wind power and lowest for hydropower the differences in wtp among the renewable sources were statistically insignificant this suggests that korean consumers prefer a renewable portfolio that minimizes power supply costs the average wtp for all three energy types was krw 1562 7 usd 1 350 per month per household which was approximately 3 7 of the average monthly electricity bill in 2010 this amount represents only 58 2 of what the korean government allocated in its budget to the new and renewable energy dissemination program in 2010 thus our results imply that the promotion of the new and renewable energy dissemination program may be difficult only with the wtp for electricity generated from renewable sources specifically the mean wtp will not support the set aside dissemination capacity for pv after 2014

modeling of biomass to energy supply chain operations applications challenges and research directions reducing dependency on fossil fuels and mitigating their environmental impacts are among the most promising aspects of utilizing renewable energy sources the availability of various biomass resources has made it an appealing source of renewable energy given the variability of supply and sources of biomass supply chains play an important role in the efficient provisioning of biomass resources for energy production this paper provides a comprehensive review and classification of the excising literature in modeling of biomass supply chain operations while linking them to the wider strategic challenges and issues with the design planning and management of biomass supply chains on that basis we will present an analysis of the existing gaps and the potential future directions for research in modeling of biomass supply chain operations

an overview of implemented renewable energy policy of pakistan abstract after initiation of renewable energy policy in 2006 yet it could not be executed the green path for sustainable energy development in pakistan currently the share of non hydro big hydro projects renewables is less than 4 less than 900 mw of total installed electricity capacity against the medium term plan of having minimum capacity of 9700 mw in 2030 with several strategies and goals established in place to support the development of renewables however it is not well organized and also ill managed to find the effective renewable energy mix for the country according to targets this study aims to analyze that whether targets of renewable energy technology rets deployment will be met under the current regime a cross country analysis of renewable energy status reveals the workable instruments to increase the growth of rets amongst developed and developing nations it is clearly evident that without supplementary and policy instruments these ambitious targets cannot be achieved the strong political and financial commitments are necessary to accomplish the green pathway as governments are more tilted towards thermal power generation to overcome the huge electricity demand supply gap

the effect of financial constraints technological progress and long term contracts on tradable green certificates tradable green certificates tgcs have recently become a diffuse instrument to support renewable electricity in oecd countries although it is perhaps too early to draw a conclusive judgement on the effectiveness of this instrument in increasing renewable capacity and decreasing the price of certificates one view in the literature maintains that long term contracts are of particular importance for tgcs to be effective this paper contributes to this debate by analysing how financial constraints and technological progress can induce investors to hold pessimistic expectations of their ability to sell green certificates and still make a profit clearly these expectations will prevent investors from building new capacity to fulfil the quota comprised in tgcs and will keep the price of certificates traded in the market high as this kind of expectation is not influenced by most design features of tgcs one can conclude that long term contracts are particularly important in determining the effectiveness and cost effectiveness of these instruments some attention should therefore be paid to the features of the tgcs which induce obliged parties to offer long term contracts to renewable generators

an exploratory game theoretic analysis of biomass electricity generation supply chain this study proposes a game theoretic approach to model and analyze the process of utilizing biomass for power generation considering three players distributor facility developer and participating farmer we characterize the nash equilibrium of the sequential game and discuss its features a special attention is devoted to the analysis of the impact of incentives and initial target on the equilibrium in which the biomass is part of electricity production

the bias towards zero in aggregate perceptions an explanation based on rationally calculating individuals i introduction a central theme in the study of economic behavior is individual rationality or utility maximizing behavior contrary to the accusations of many outside critics the economics assumption of rationality neither denies that information is costly nor implies that decisions are error free rational expectations allows for ignorance but insists on the absence of systematic errors in the aggregate even if some individuals make large underestimates their errors are offset by large overestimates made by others alternatively even if people on average underestimate the effect of some variable during one period they may overestimate its effect at a later date these assumptions form the basis for the standard conclusion that the government cannot systematically outsmart the public the theory and application of rational expectations has generated a vast literature over the last couple of decades it is now well known that the application of rational expectations theory to actual cases may for instance be unsuitable when there are systematic errors in the observed variables when loss functions are not quadratic or when variables are constrained to take only positive values while such limitations may well be problematic these objections have in our view not been very damaging in the sense that rational expectations still provides a natural starting point for much economic analysis like rational expectations this paper takes individual rationality as its central theme yet we reach a radically different conclusion from rational expectations regarding aggregate behavior we demonstrate that individual errors in identifying the relationships among variables cause a downward bias in the aggregate that would be equivalent to the public underestimating the strengths of the true relationships rational expectations has considered the misestimation type of error which can cancel out in the aggregate but with errors in identifying relationships there exists no similar cancelling out effect and thus the public appears to irrationally underestimate the strengths of relationships the paper is organized as follows first we set up a simple formal model to examine the misestimation problem and then contrast it to the identification problem section iii explains why the identification problem can be so important even when a relatively small number of variables are involved section iv reviews empirical evidence of bias in the expectations formation literature as shown in section v our hypothesis can be used to explain political business cycles in a standard aggregate supply and demand framework ii theory in our model individuals acquire knowledge in two steps they first identify the causal relationship between two or more variables and then estimate the strength of that relationship as with herbert a simon s satisficing approach 1959 1979 and the analysis in ronald a heiner 1988 we assume finite intellectual capabilities however our model neither assumes nor implies anything about simon s satisficing approach and the often related concept of bounded rationality instead our inquiry is strictly limited to the consequences of omitting variables and will not address the more ambitious question of what strategies individuals might adopt to improve learning like heiner we distinguish between the reliability of making decisions and the issue of obtaining information heiner shows that while decision making itself might be flawless when individuals face only a very limited amount of information it is optimal for them to choose a larger information set and enter into the imperfect decision zone he provides several different reasons finite channel capacity information complexity and nonlocal information for why the advantage of having much information also translates into more decision error while heiner s model deals with individuals making correct or incorrect decisions his underlying reasoning could equally well be used to motivate our analysis of why a portion of the population fails to appreciate certain economic relationships

devising renewable heat policy overview of support options renewable energy sources of heat offer the substantial economic environmental and social benefits associated with renewable electricity but policy to support their expansion is considerably less advanced the potential for applying various support instruments to renewable heat is considered with advantages and disadvantages discussed c 2012 published by elsevier ltd

state renewable energy electricity policies an empirical evaluation of effectiveness over the past decade state governments have emerged as us energy policy leaders across the country states are adopting policy instruments aimed at carbon mitigation and renewable energy deployment one of the most prevalent and innovative policy instruments is a renewable portfolio standard rps which seeks to increase the share of renewable energy electrification in the electricity market this analysis evaluates the effectiveness of state energy programs with an empirical investigation of the linkage between state rps policy implementation and the percentage of renewable energy electricity generation across states we use a variant of a standard fixed effects model referred to as a fixed effects vector decomposition with state level data from 1998 to 2006 results indicate that rps implementation is not a significant predictor of the percentage of renewable energy generation out of the total generation mix yet for each additional year that a state has an rps policy they are found to increase the total amount of renewable energy generation these findings reveal a potentially significant shortcoming of rps policies political institutions natural resource endowments deregulation gross state product per capita electricity use per person electricity price and the presence of regional rps policies are also found to be significantly related to renewable energy deployment

bidding strategy of virtual power plant for participating in energy and spinning reserve markets part ii numerical analysis this paper is to evaluate the presented model in part i for bidding strategy of virtual power plant vpp with centralized control in a joint market of energy and spinning reserve service two test vpps are introduced and different scenarios are considered for markets prices at first the participation of vpp in only energy market is studied then the spinning reserve market is taken into consideration and the bids of vpp in a joint market of energy and spinning reserve service is studied under different scenarios of markets prices and the results are analyzed in all cases the results show the effectiveness and the quality of the procedure and validate the proposed model