Normative economic theory provides justification for at least partially centralized renewable energy provision due to the large, positive externalities associated with renewable energy production. However, the United States is one of the few countries without centralized renewable energy policy. Instead, the federal government actively chooses decentralized renewable energy provision by using fiscal transfers to support subnational renewable energy development. This dissertation explores why U.S. legislators choose decentralized renewable energy provision by asking two primary questions. First, what is the motivation for using federal fiscal transfers for decentralized renewable energy output considering what we know about positive spillovers and market failure associated with decentralized renewable energy production? Second, do fiscal transfers for decentralized renewable energy provision increase renewable energy production at the local level? The theoretical model proposed in Chapter Four posits why policymakers choose decentralized renewable energy provision. The chapter argues that the current political price associated with a specific policy issue affects legislators’ choices regarding good provision. I hypothesize that when the political price associated with vying for centralized good provision is high, legislators are incentivized to choose decentralized good provision. Chapter Five applies this theory to empirically evaluate the choice to decentralize renewable energy provision. The chapter examines whether the current political price of renewable energy policy affects the likelihood of a legislator proposing decentralized funding for renewable energy provision. I hypothesize that legislators will propose funding to support decentralized renewable energy development when the political price associated with renewable energy policies is high at a given time. The results show that when the political price of renewable energy policy is low, a policymaker is less likely to use grants to support renewable energy projects, finding support for the hypothesis. Chapter Six empirically evaluates the effectiveness of renewable energy grants at the local level to further understand the theoretical model proposed in Chapter Four. I hypothesize that receiving a renewable energy grant increases renewable energy output at the local level. The results support this hypothesis by showing that receiving a renewable energy grant is associated with significant and positive increases in solar energy production. These findings provide further insight into legislative decision-making and the role of renewable energy grants in renewable energy development in the U.S.

The Master’s thesis deals with the renewable resources of energy and possibilities of funding of solar electrical power production from European union funds. The thesis also contains the feasibility study and the concept of Eko-Energie program grant application form, which can help to gain the financial support for increasing the effectivity of the project.