This paper analyzes the relationship between natural gas prices and solar installation in the past ten years. The point is to explain how the fluctuations in natural gas prices have effected solar installation. Briefly, natural gas prices from three to five years ago have a positive coefficient on solar installation in the current period, meaning that as the natural gas price three to five years ago increases, solar installation today increases. In course of the analysis, we find that the Goldilocks theory holds true and a natural gas price range from $4 to $6 leads to the highest level of installed solar capacity in the United States. Since natural gas prices today are lower than the Goldilocks range, the solar industry would prosper from a cap and trade system, a carbon tax, or exporting natural gas, raising the price of natural gas to the $4 to $6 range.
Bachelor of Arts in Economics
Date of Award
Walton, Jeffrey, "An Empirical Exploration of the Effects of Natural Gas Prices on Solar Energy Growth" (2014). Economics Theses. 95.