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Climate Change, Operating Flexibility and Corporate Investment Decisions / Chen Lin, Thomas Schmid, Michael S. Weisbach.
- Format:
- Book
- Author/Creator:
- Lin, Chen.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w26441.
- NBER working paper series no. w26441
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2019.
- Summary:
- Extreme temperatures lead to large fluctuations in electricity demand and wholesale prices of electricity, which in turn affects the optimal production process for firms to use. Using a large international sample of planned power plant projects, we measure the way that electric utilities' investment decisions depend on the frequency of extreme temperatures. We find that they invest more in regions with more extreme temperatures. These investments are mostly in flexible gas and oil-fired power plants that can easily adjust their output, to improve their operating flexibility. Our results suggest that climate change is becoming a meaningful factor affecting firms' behavior.
- Notes:
- Print version record
- November 2019.
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