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

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  • Eric Bowen

    (West Virginia University, College of Business and Economics)

  • Donald J. Lacombe

    (West Virginia University, Regional Research Institute)

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.

Suggested Citation

  • Eric Bowen & Donald J. Lacombe, 2015. "Spatial interaction of Renewable Portfolio Standards and their effect on renewable generation within NERC regions," Working Papers 15-03, Department of Economics, West Virginia University.
    • Handle: RePEc:wvu:wpaper:15-03
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    1. Eric Bowen & Donald J. Lacombe, 2017. "Spatial Dependence in State Renewable Policy: Effects of Renewable Portfolio Standards on Renewable Generation within NERC Regions," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    2. Guillaume Bourgeois & Sandrine Mathy & Philippe Menanteau, 2017. "The effect of climate policies on renewable energies : a review of econometric studies [L’effet des politiques climatiques sur les énergies renouvelables : une revue des études économétriques]," Post-Print hal-01585906, HAL.
    3. Consolación Quintana-Rojo & Fernando-Evaristo Callejas-Albiñana & Miguel-Ángel Tarancón & Isabel Martínez-Rodríguez, 2020. "Econometric Studies on the Development of Renewable Energy Sources to Support the European Union 2020–2030 Climate and Energy Framework: A Critical Appraisal," Sustainability, MDPI, vol. 12(12), pages 1-26, June.

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    More about this item

    Keywords

    Renewable Portfolio Standards; Renewable Energy Policy; Spatial Econometrics;
    All these keywords.

    JEL classification:

    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods

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