Electricity generation and economic performance: On the 2021 Texas power crisis

Electricity outage during the 2021 Texas power crisis substantively undermines the state’s economy. To evaluate the economic impacts, we empirically provide a baseline estimate for such an outage with a GDP elasticity of electricity generation of 0.62 and detect that electricity generation significantly Granger causes Texas’ GDP but not vice versa. Our investigation reveals that the 2021 power crisis tends to reduce Texas’ GDP by at least 1.44%. Because power system primarily underpins the economy, our findings imply that Texas should utilize various available technological and regulatory options to strengthen its power system to accommodate more resilience.