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Impact of the Rapid Expansion of Renewable Energy on Electricity Market Price: Using machine learning and shapley additive explanation

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  • LI Chao
  • MANAGI Shunsuke

Abstract

The positive effects of greenness in living environments on human well-being are known. As a widely used proxy, the nighttime light (NTL) indicates the regional socio-economic status and development level. Higher development levels and economic status are related to more opportunity and higher income, ultimately leading to greater human well-being. However, whether simple increases in greenness and NTL always produce positive results remains inconclusive. Here, we demonstrate the complex relationships between human well-being and greenness and NTL by employing the random forest method. The accuracy of this model is 81.83%, exceeding most previous studies. According to the analysis results, the recommended ranges of greenness and NTL in living environments are 10.91% - 32.99% and 0 – 17.92 nW/cm 2 ･sr , respectively. Moreover, the current average monetary values of greenness and NTL are 3351.96 USD/% and 658.11 USD/(nW/cm 2 ･sr) , respectively. The residential areas are far away from the abundant natural resources, which makes the main population desire more greenness in their living environments. Furthermore, high urban development density, represented by NTL, has caused adverse effects on human well-being in metropolitan areas. Therefore, retaining a moderate development intensity is an effective way to achieve a sustainable society and improve human well-being.

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  • LI Chao & MANAGI Shunsuke, 2022. "Impact of the Rapid Expansion of Renewable Energy on Electricity Market Price: Using machine learning and shapley additive explanation," Discussion papers 22093, Research Institute of Economy, Trade and Industry (RIETI).
    • Handle: RePEc:eti:dpaper:22093
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    References listed on IDEAS

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    1. Sendhil Mullainathan & Jann Spiess, 2017. "Machine Learning: An Applied Econometric Approach," Journal of Economic Perspectives, American Economic Association, vol. 31(2), pages 87-106, Spring.
    2. Paul L Joskow, 2019. "Challenges for wholesale electricity markets with intermittent renewable generation at scale: the US experience," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 35(2), pages 291-331.
    3. James Bushnell & Kevin Novan, 2018. "Setting with the Sun: The Impacts of Renewable Energy on Wholesale Power Markets," NBER Working Papers 24980, National Bureau of Economic Research, Inc.
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