Deck 13: The Investors Perspective: Renewable Energy

Question 1

High feed-in tariffs and RPS were more likely to be victims of the budget process.

Answer 1

False

Question 2

The size of the Chinese economy implies that resources cannot be readily mobilized by the government in the domestic capital and factor input markets.

Answer 2

False

Question 3

Wind power differed from solar power in that blades and tower sections were less expensive to ship than were solar panels.

Answer 3

False

Question 4

Depending extensively on government subsidies for solar power is not free from risks.

Question 5

Chinese manufacturers with conventional photovoltaic technology set the cost standard for the renewable energy industry.

Question 6

Rents from demand-side subsidization were earned by power producers and the producers of power generation inputs, such as solar panels.

Question 7

Supply-side subsidies were less likely to create U.S. jobs, since they were not restricted to companies producing in the United States.

Question 8

Renewable energy production was dependent on subsidies because it was not cost competitive.

Question 9

Solar power producers and their suppliers were well organized.

Question 10

The direct costs of subsidies such as grants and loan guaranties are the corresponding government budget expenditures and liabilities.

Question 11

Subsidization was economically disadvantageous because it increased the nation's dependence on imported fuels.

Question 12

The demand-side subsidies decreased the supply of renewable power and increased the negative externalities from emissions.

Question 13

Many smart grid applications were driven more by opportunities for efficiency than by government support.

Question 14

Subsidization of renewable power deters producers from realizing economies of scale.

Question 15

Indirect subsidies such as high feed-in tariffs were funded by higher prices to consumers of electricity.

Question 16

Nonmarket risks can arise from private politics, including consumer reactions, activist and NGO challenges, and changes in public sentiment.

Question 17

Subsidization in the form of high feed-in tariffs raises electricity prices.

Question 18

Demand-side subsidies are provided to power producers.

Question 19

The challenge to the subsidies for renewable power and solar power in particular came from entrepreneurial politics.

Question 20

In the short run, the subsidies increased the budget deficit.

Question 21

The growing market share of Chinese wind tower and turbine producers generated complaints that ________.

A) the quality of material used for producing wind towers and turbines by American companies was inferior and resulted in loss of market share
B) the subsidies provided to U.S. wind power companies were being used to purchase equipment from abroad rather than to create jobs in the United States
C) importing turbines from China violated the terms and conditions of trade set down by the International Trade Centre
D) the subsidies provided to U.S. wind power companies were fairly inadequate compared to that provided to Chinese companies by the Chinese government

Question 22

Supply-side subsidization did not face market risks, whereas subsidization through high feed-in tariffs was subject to high budget pressures.

Question 23

Critics of the American Recovery and Reinvestment Act were of the opinion that ________.

A) the government provided companies with low-cost loans from government supported banks
B) the Department of Energy did not administer the loan guaranties based on applications by companies
C) the subsidies offered by the government were fairly inadequate
D) the government was trying to pick winners rather than allowing the market to determine the winners

Question 24

China took the lead in the production of solar panels primarily because ________.

A) labor costs in China were very low relative to that in Europe and the United States
B) the domestic demand for solar panels fell sharply
C) the price of pure silicon rose dramatically as supply caught up with demand
D) demand-side subsidization was not implemented in the United States

Question 25

Solar power plants in California faced nonmarket opposition because ________.

A) political lobbies encouraged the use of coal and natural gas
B) most solar power plants failed to meet the specified safety regulations and standards
C) of protests from environmentalists who claimed that such projects posed a veritable threat to the wildlife of the region
D) the government failed to communicate the benefits of renewable energy to people residing in the region

Question 26

The U.S. government provided subsidization on both the demand and supply sides of the market for renewable power.

Question 27

Which of the following is an economic advantage of the subsidization of renewable power?

A) Subsidization decreases dependence on imported fuels.
B) Subsidization renders the adverse effects of traditional energy sources harmless.
C) Subsidies for renewable power plants do not affect states with budget deficits.
D) Subsidies for renewable power plants increase the tax revenue of the country substantially.

Question 28

Which of the following challenges did American renewable energy companies face in 2011?

A) heavy taxation by a debt-ridden government
B) diminishing competition in the market
C) innovation and technological change
D) public ignorance over environmental issues

Question 29

Analyze the economic and political rationales behind subsidization.

Question 30

What are the factors that enabled China to assume market leadership in the solar panel market? What were the market signals for solar panels in Europe and the United States?

Question 31

The nonmarket risk to demand-side subsidization stemmed both from government budget concerns and imported solar panels that hindered achieving the political objective of creating jobs.

Question 32

Write a short note on the costs of subsidization.

Question 33

Supply-side subsidies include ________.

A) tax credits for households to install solar panels on rooftops
B) tax credits for businesses to purchase electric cars
C) high feed-in tariffs for power producers
D) grants for households to purchase electric cars

Question 34

The principal risk to subsidization through high feed-in tariffs was from business customers forced to pay higher prices for electricity.

Question 35

Which of the following is true with regard to the costs of subsidization?

A) Subsidization in the form of high feed-in tariffs lowers electricity prices.
B) U.S. consumers had benefited from the cost-efficient location of production in China even though it meant the loss of high-paying jobs in the United States.
C) The demand-side subsidies increased the negative externalities from emissions.
D) Renewable energy production such as solar and wind power was cost competitive and hence was not dependent on subsidies.

Question 36

Demand-side subsidies include ________.

A) tax credits for households to install solar panels on rooftops
B) electric utilities for smart grid infrastructure
B) high feed-in tariffs for power producers
C) loan guarantees to solar panel producers

Question 37

The Chinese government views renewable energy as an attractive industry for growth.

Question 38

Why were the loan guarantee and cash option awarded to wind power producers jeopardized?

A) State public utility regulatory agencies were barred by law from determining wind energy prices.
B) The huge federal budget deficit required measures to reduce expenditure.
C) State public utility regulatory agencies gave a negligible premium for wind power.
D) The price of natural gas fell considerably.