| ID | 127290 |
| Title Proper | Role of regulatory uncertainty in certificate markets |
| Other Title Information | a case study of the Swedish - Norwegian market |
| Language | ENG |
| Author | Fagiani, Riccardo ; Hakvoort, Rudi |
| Publication | 2014. |
| Summary / Abstract (Note) | Price volatility in green certificate markets reflects uncertainty over future prices, representing a major source of risk for renewable energy generators. Price risk is considered the principal deficiency of this market-based policy since it causes investors to require higher returns. Moreover, investors are exposed to regulatory risk; namely, the risk that a change in the regulation will materially impact the certificate price. Regulatory uncertainty is reflected in market volatility exacerbating certificate price risk. Using an econometric approach, we investigate the role of regulatory changes on price volatility in the Swedish certificate market. The results of our analysis indicate that regulatory changes strongly affect certificate markets, resulting in periods of higher volatility. Moreover, we analyze whether certificate price volatility has changed after creating a joint Swedish/Norwegian market. Results indicate that the ambivalence surrounding the creation of this bigger market led to a period of increased price volatility between 2010 and 2011. Overall, this article brings a better understanding of the role of regulatory uncertainty on certificate markets, and gives evidence for its negative impact in terms of increased price volatility. |
| `In' analytical Note | Energy Policy Vol.65, No. ; February 2014: p.608-618 |
| Journal Source | Energy Policy Vol.65, No. ; February 2014: p.608-618 |
| Key Words | Energy Policy ; Energy Strategy ; Energy Planning ; Economic Interest ; Energy Crisis ; Petro Crisis ; Norway ; Sweden ; Energy Market ; Regulatory Uncertainty ; Green Certificate Markets ; Price Volatility |