It is generally believed that priority dispatch of renewable energy results in decreases in the economic cost and emission reduction of a power system. However, when peak shaving cost of coal-fired units is considered, views are different. In this study, we focus on the additional cost resulting from fluctuating output of coal-fired units during the peak shaving process for renewable energy priority dispatch. Data from the Beijing-Tianjin-Tangshan Power Grid (BTT) in China were used. It was found that the priority dispatch of renewable energy resulted in an increase in environmental quality, which was primarily attributed to the reduction in CO2 emissions, and a decrease in the total economic cost, even when the negative impact of the fluctuating output of coal-fired units on energy efficiency was considered. An analysis of the impact of more flexible output of coal-fired units indicated that at the current technical level, greater peak shaving did not always have a positive impact on economic cost. Policy implications are provided in the end. (C) 2020 Published by Elsevier Ltd.