Graduation Year

Spring 2013

Document Type

Open Access Senior Thesis

Degree Name

Bachelor of Arts

Department

Environmental Analysis

Second Department

Economics

Reader 1

Bowman Cutter

Terms of Use & License Information

Terms of Use for work posted in Scholarship@Claremont.

Rights Information

© 2012 Roland P. Thayer

Abstract

The feed-in tariff is a flexible, yet effective mechanism in promoting the proliferation of renewable electricity in California. The tariff creates a stable investment environment that protects both the utilities and the renewable electricity generators. Not only does the system foster capacity growth, but also technological advancement to the point where renewable electricity can compete in the market without assistance. From an environmental standpoint, the feed-in tariff contributes significantly towards achieving the emissions reduction goals set forth by AB32 without causing harmful increases to electricity prices.

The feed-in tariff model has been used in countries all over the world and in countless variations. The California model is certainly unique, using a dynamic combination of eligibility requirements, pricing mechanisms, and degression rates. Flaws can already be spotted in the system, but it is too early to tell what type of market effects will truly prevail. The key will be to analyze the market effects as they happen and adjust the tariff accordingly. In the meantime, it would be advantageous to pursue more aggressive green marketing campaigns in order to establish meaningful social norms in favor of environmentally responsible goods and practices. These strong social norms will help to ensure quicker and more effective transitions to green products in the future, including the complete transition to renewable electricity over the coming generations.