Regulatory drift and path dependence in distributed generation policies across US states

2021 Fall.Includes bibliographical references.At this moment in the technological transition toward clean energy resources, two related strands of social science research deserve further empirical study: (1) the drivers of policy change, or alternatively, the factors that inhibit comprehensive policy change, and (2) the politics surrounding the regulation of clean energy technologies. Regarding the latter, this study is particularly interested in regulatory frameworks governing small-scale systems located close to the point of electricity consumption, or distributed generation systems, or DGs. Much of the political science and energy policy literature examines the drivers of policy change for renewable technologies writ large, but fewer studies have taken a focused approach on the policy mechanisms to drive adoption of renewable technologies specifically within small- and mid-size markets for residential and commercial properties. Because the regulatory environment for DGs is largely shaped by state policymakers, this research seeks to understand the sources of institutional resistance toward policies that would expand DG deployment at the state level. Two concepts in the political science and public policy literature potentially explain resistance toward updating regulatory frameworks to facilitate the technological transition. The first is path dependence, which explains how institutions become locked-in to outdated technologies due to increasing returns. The second is policy or regulatory drift, which illustrates how institutions avoid comprehensive change and remain stuck using regulatory structures that become inadequate for addressing social and environmental risk as circumstances evolve. This dissertation is focused on the following research question: what can explain the variance in path dependence and regulatory drift across states' regulatory regimes, specifically in DG integration policy? To answer this question, I conduct quantitative analyses of the association of political and economic variables with pro-DG policy outcomes across a seven-year period, from 2012 to 2018. Chapter Three analyzes the state policy environment using a quantitative index measure factoring in a series of DG integration policies, emphasizing net energy metering and interconnection standards. Chapter Four analyzes a similar set of political-economic and technical variables against the likelihood of pro-DG decisions from public utility commissions. The study finds some support for the hypothesis that path dependence and regulatory drift is occurring across states' DG policy environments, but the independent variables of interest – coal generation, utility market concentration, and power system characteristics – exert an uneven impact on DG policy outcome. Statistical relationships are conditional upon geographic region and electricity price and interpreting results across the two quantitative models is not clear-cut. This project contributes to our understanding of drift and path dependence in DG policy by providing a snapshot of the observable relationships between political-economic factors and regulatory favorability toward DG, and further research can utilize this project as a springboard to precisely identify the drivers of DG policy outcomes or discuss the role of drift in phases of technological change