Climate change, electricity reliability, and energy structure: County-level evidence from China

Anecdotal evidence suggests that climate change and the widespread adoption of renewable energy may negatively impact power reliability, potentially causing significant economic damage. However, rigorous quantitative studies exploring the relationship among climate change, energy structure, and power reliability remain scarce, primarily due to the lack of reliable measures for assessing power reliability. Using county-level data from China between 2013 and 2019, we propose a novel method to construct a proxy variable that measures electricity reliability at a broad geographic scale and high temporal frequency using satellite data. This innovative approach enables us to empirically investigate the effects of climate change on electricity reliability and the heterogeneous impacts based on local energy structure. Our findings provide strong evidence that hot weather, precipitations, and wind power generation compromise electricity reliability, consistent with theoretical predictions, whereas the impacts of solar energy are not robust due to low penetration rate. Furthermore, our heterogeneity analysis reveals that thermal power and solar energy could exacerbate the adverse effects of climate change, underscoring the need for enhanced services to ensure electricity security.