Finance and the re-shaping of the U.S. electricity system

University Of South Carolina At Columbia, Columbia SC

Investigators

Abstract

This project examines the role of the financial industry in reallocating investment in the U.S. electricity system. The U.S. electricity system has experienced a range of regulatory, technological, and ideological transformations and today is comprised of traditional competitive markets, state energy policies and initiatives, and increases generation from natural gas and renewable energy. This research will illustrate how investment is being allocated amongst different utilities, markets, and generation technologies, and how financial firms are owning and operating power plants and trading electricity in markets. It examines the relationship between monopoly and competition in the U.S. electricity system, and how financial entities react to technological change in the choices of generation fuels. The findings from this study will be disseminated via publications that will inform various industry, government, and policy organizations that work on issues related to the electricity industry. The results will provide the basis for curriculum development that broadens participation students The project investigates how financial actors, strategies, and practices are reshaping the U.S. electricity system. It uses a mixed methods approach that combines the results of case studies the activities of major investment banks with in-depth interviews with key investment analysts, investors and electricity traders. The results will determine the new financial actors that have emerged in the electricity sector, and how and why financial entities are influencing the activities in large investor owned utilities. Finally, these results will illustrate how electricity traders are using financial instruments to respond to changes in the types of generation, ownership, and regulation in the electricity industry. This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria.