Financing the energy transition: Renewable energy and finance in the U.S. electricity system

Authors: Conor Harrison*, University of South Carolina
Topics: Energy
Keywords: renewable energy, finance
Session Type: Paper
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The U.S. electricity system is comprised of a heterogeneous and increasingly shifting mix of utilities, independent power producers, regulators, and quasi-market entities. In varying ways, these actors are all dependent upon financial capital to fund projects, raise money for operations, and add liquidity to marketplaces. In this paper I draw on document analysis, participant observation at industry conferences, and interviews with financial actors to examine how financial entities – including equities analysts, project financiers, and electricity traders – are shaping, valuing, and responding to the ongoing and contested, but seemingly inexorable, shift to renewable energy in the U.S. I focus on three illustrative cases: (1) the mid-Atlantic region, where aggressive state-level renewable energy mandates overlap with the ‘technology-neutral’ PJM wholesale electricity market; (2) North Carolina, in which major investor owned utilities are seeking to take complete control of existing and future renewable energy production; and (3) merchant generation, where firms traditionally dependent on fossil fuels are attempting to make inroads in the renewable energy sector. Altogether, these cases show that realizing surplus value in the U.S. renewable energy sphere is not simply a case of buying cheap and selling dear. Rather, this paper shines light on the mix of complex financial structuring and favorable regulation that makes renewable energy profitable in some areas but virtually untenable in others.

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