Center for the Study of Energy Markets

We examine the adoption of gas turbine electricity generators by electric utilities and independent power producers from 1980 to 2001 in search of evidence of economic regulation inducing particular type of technology adoption and development. We focus on three major attributes of gas turbines - capacity, heat rate, and age - and two major economic regulatory regimes - vertically integrated utilities operating price-regulated monopoly franchises and independent power producers competing in restructured, wholesale electricity markets. We argue and demonstrate using sales data that the decade long move toward greater “deregulation” of the electricity industry in the U.S. has led to a stronger incentive for firms to adopt large capacity, heavy frame turbines well suited for combined cycle, baseload applications. This suggests that recent and current developments of “CCGT” technology are examples of economic regulation-induced innovation.