The Impact of Geopolitical Risks on Price Volatility of New Energy in China

Abstract

In recent years, the rise in geopolitical risks has led to significant changes, and the volatility of energy prices has also increased, resulting in numerous challenges for people's daily lives. This paper selects three indicators, GPR, GPA, and GPT, to measure geopolitical risk and uses the GARCH-MIDAS model based on mixed-frequency data to explore the impact of geopolitical uncertainty on the Chinese new energy market. The study shows that geopolitical risk has a positive and significant impact on solar and nuclear energy, while for wind energy, the influence of GPR and GPA on its long-term volatility is not significant, but GPT has a significant impact on the volatility of wind energy. Moreover, the impact of GPT and GPA on the price volatility of new energy is asymmetric, indicating that geopolitical uncertainty is complex and requires further exploration.