Rethinking government subsidies for renewable electricity generation resources

U.S. renewable electricity resource subsidization program design relies on production-based payments that lower electric energy market prices, often below zero, contrary to the objective of increasing market prices when correcting for an environmental externality. An alternative pricing approach, capacity-based subsidy payments, would substantially reduce the likelihood of negative electric market prices. A more thoughtful examination of the impact of subsidization program design on wholesale power markets is long overdue.