Spatial interaction of Renewable Portfolio Standards and their effect on renewable generation within NERC regions

Eric Bowen and Donald Lacombe
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Eric Bowen: West Virginia University, College of Business and Economics
Donald Lacombe: West Virginia University, Regional Research Institute

No 15-03, Working Papers from Department of Economics, West Virginia University

Abstract: While several studies have examined the effectiveness of renewable portfolio standard laws on renewable generation in states, previous literature has not assessed the potential for spatial dependence in these policies. Spatial dependence in the electric grid is likely, considering the connectivity of the electric grid across NERC regions. Using the latest spatial panel methods, this paper estimates a number of econometric models to examine the impact of RPS policies when spatial autocorrelation is taken into account. Consistent with previous literature, we find that RPS laws do not have a significant impact on renewable generation within a state. However, once spatial dependence is accounted for, we find evidence that a state’s RPS laws have a significant positive impact on the share of renewable generation the NERC region as a whole. These findings provide evidence that electricity markets are efficiently finding the lowest-cost locations to serve renewable load to states with more stringent RPS laws.

Keywords: Renewable Portfolio Standards; Renewable Energy Policy; Spatial Econometrics (search for similar items in EconPapers)
JEL-codes: Q42 Q48 R15 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2015-05
New Economics Papers: this item is included in nep-ene, nep-reg and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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