Revised version published in Harnessing …

EI @ Haas WP 202R Building Blocks: Investment in Renewable and Non-Renewable Technologies James Bushnell Revised April 2010 Revised version published in Harnessing Renewable Energy in Electric Power Systems, Resources for the Future Press, 2010. Energy Institute at Haas working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to review by any editorial board. 2010 by James Bushnell. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit is given to the source. 1 Building Blocks: Investment in Renewable and Nonrenewable Technologies James Bushnell Iowa State University and NBER April, 2010 1. Introduction Within a span of 20 years, the electric power industry has become the central focus of two extraordinary policy trends, each one significant enough to fundamentally reshape the industry.

5 The subsidization of renewable generation is expanding in parallel with efforts to create cap-and-trade programs for CO 2.This can be seen as antithetical to the spirit of a cap-and-trade program,

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