CEA Energy Policy & Market Analysis 3

Question 1

The Energy Policy Act of 2005 created a Production Tax Credit (PTC) primarily for which technology at that time?

Accepted Answer

Wind energy and other qualifying renewables

Answer

The PTC provides a per-kilowatt-hour tax credit for electricity generated from qualifying renewable sources, with wind historically being the primary beneficiary.

Question 2

In deregulated electricity markets, the 'energy-only' market design relies on which mechanism to incentivize adequate generation investment?

Accepted Answer

High energy prices during scarcity events (scarcity pricing)

Answer

Energy-only markets depend on elevated spot prices during scarcity to provide the revenue signals needed to attract new investment without separate capacity payments.

Question 3

What is the primary purpose of a strategic petroleum reserve (SPR)?

Accepted Answer

To provide emergency crude oil supply during supply disruptions

Answer

The U.S. SPR holds crude oil stocks that can be released to counteract sudden supply interruptions and reduce economic impacts of oil price shocks.

Question 4

Under a cap-and-trade program, if the allowance price rises significantly above expectations, which policy safety valve is sometimes included?

Accepted Answer

A cost containment reserve that releases additional allowances at a trigger price

Answer

A cost containment reserve releases a fixed pool of extra allowances at a predetermined price ceiling, preventing compliance costs from exceeding policy intent.

Question 5

Which concept describes the minimum price at which a generator will offer power into the wholesale market, typically reflecting variable operating costs?

Accepted Answer

Marginal cost (short-run)

Answer

A generator's short-run marginal cost (primarily fuel and variable O&M) sets its offer floor, since it will not bid below the cost of actually producing each additional megawatt-hour.

(CEA) Certified Energy Analyst Practice Test

(CEA) Certified Energy Analyst Practice Test

CEA Energy Policy & Market Analysis 3