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Abstract: Production tax credits (PTC) and investment tax credits (ITC) are two policies regulated by the U.S. government to stimulate renewable energy electricity generation. In this thesis, I constructed models on both the individual level and the aggregate level characterizing wind firms' reactions on electricity prices and tax credit policy statuses with uncertainty. Using estimated values of ... read morethe parameters shown in models, I calculate trigger price lists of wind firms with different levels of production capacity. By running 1000-time simulations of stochastic processes contained in the model, I get expected values of two key measures following the Monte Carlo Method. Then I conduct comparisons between PTC and ITC on effectiveness and efficiency, and find ITC encourages more investment in wind energy, and costs less on each kilowatt-hour electricity stimulated than PTC does. In the end, I give several policy suggestions basing on comparison results and the sensitivity analysis.
Thesis (M.S.)--Tufts University, 2016.
Submitted to the Dept. of Economics.
Advisor: Gilbert Metcalf.
Committee: Gilbert Metcalf, and Ujjayant Chakravorty.
Keywords: Economics, Energy, and Environmental economics.read less