Document Type

Working Paper

Publication Date

10-7-2015

College/Unit

Chambers College of Business and Economics

Document Number

15-03

Department/Program/Center

Economics

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 recent 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, 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 in states with more stringent RPS laws.

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