Evaluating the Economic, Security, and Environmental Values of Renewable Energy in the Context of the New Power System

This paper examines the economic, security, and environmental values of renewable energy integration in liberalized electricity markets. Using an ARMAX-GARCHX model, we find that renewable energy significantly reduces electricity prices through the merit-order effect, displacing costlier fossil fuel generation. Additionally, renewable energy delivers security value by reducing daily price volatility. To quantify environmental benefits, a back-of-the-envelope calculation based on the DEF method estimates substantial reductions in carbon emissions, reinforcing the role of renewables in climate change mitigation. These findings underscore the diverse advantages of renewable energy, highlighting the need for market reforms and policy support to fully harness its economic, security, and environmental potential.