Renewable energy strategies and energy security

Abstract

This paper considers the effects of renewable energy strategies on energy security. Based on theoretical analysis, we conclude that energy supply shocks benefit firms with a sacrifice of consumer surplus, while the effects on social welfare depend on the degree of environmental concerns. Meanwhile, renewable energy strategies improve energy security by reducing the consumption of conventional energy and by reducing emissions. Furthermore, the total consumption of conventional energy decreases with the number of firms that adopt renewable energy. In addition, for low marginal costs of renewable energy, the efficiencies are equivalent for different covering rates of governmental subsidies. For high fixed costs or marginal costs, governmental subsidies yield excess capacity.