We collect ownership data of U.S. power plants accounting for 99% of U.S. electricity generation over the 2008-2020 period. Domestic listed corporations have reduced their ownership from 69% to 54% of total generation, while private equity,...
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ZBW - Leibniz-Informationszentrum Wirtschaft, Standort Kiel
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We collect ownership data of U.S. power plants accounting for 99% of U.S. electricity generation over the 2008-2020 period. Domestic listed corporations have reduced their ownership from 69% to 54% of total generation, while private equity, institutional investors, and foreign corporations have increased their ownership from 8% to 24%. These new entrants have increased their share largely through the adoption of innovative technologies and creation of new natural gas, solar, and wind power plants, rather than acquisitions of existing plants. We find only limited support for the leakage hypothesis that incumbent domestic corporations, which are subject to more disclosure requirements and scrutiny, sell older fossil-fuel power plants to the new ownership types in order to keep them alive. Market deregulation is the main economic factor explaining the heterogeneity in ownership structure in the electricity sector, while climate concerns and renewable policy measures have a limited effect. The changing ownership structure has implications for electricity markets as private equity operates power plants at lower capacity factors and sells electricity for $1.87 higher average price per MWh. Private equity owners sell electricity under contracts with shorter duration, shorter increment pricing, and more peak-term periods, especially when selling electricity generated from fossil fuels
