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| 1 |
ID:
097217
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| Publication |
2010.
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| Summary/Abstract |
Feed-in tariff (FIT) and tradable green certificate (TGC) schemes are studied in a formal model and numerical example using the UK data. We find that if the markets were perfectly competitive, then feed-in tariff and the certificate price would be the same. However, when the markets are imperfect, they are generally different. While both the tariff and certificate price fluctuate around the difference between the costs of green and black energy, the tariff deviates more from the cost difference than the certificate price. The supplies of both black and green energy under FIT are higher than TGC, obviously as a result of subsidies. A troubling outcome is that the total energy supply increases under FIT as the renewables quota increases, which can negate other measures to mitigate climate changes such as demand management. Finally, using the data from the UK market, we find that social welfare under TGC is consistently higher than FIT for a wide range of values of the parameters.
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| 2 |
ID:
112909
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| Publication |
2012.
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| Summary/Abstract |
Tradable green certificate (TGC) or renewables obligation (RO) programs typically include a buy-out option, but only in the UK the buy-out fund is redistributed back to the suppliers who have submitted the certificates. We show that when the buy-out fund is redistributed, the supply of renewable energy responds positively to the market conditions and renewables target. Without it, the buy-out rate is equivalent to a maximum price. However, redistribution of the buy-out fund may induce strategic behavior from producers who have market power. We analyze the impacts of market power and integration on the supply of conventional and renewable energy under the RO program with the buy-out fund recycled, and devise some empirical tests to predict these impacts. Policy implications of this study are discussed with special reference to the new FiT CfD system.
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| 3 |
ID:
132757
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| Publication |
2014.
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| Summary/Abstract |
In the UK electricity market, generators are obliged to produce part of their electricity with renewable energy resources in accordance with the Renewable Obligation Order. Since 2009 technology banding has been added, meaning that different technologies are rewarded with a different number of certificates. We analyze these two different renewable obligation policies in a mathematical representation of an electricity market with random availabilities of renewable generation outputs and random electricity demand. We also present another, alternative, banding policy. We provide revenue adequate pricing schemes for the three obligation policies. We carry out a simulation study via sampling. A key finding is that the UK banding policy cannot guarantee that the original obligation target is met, hence potentially resulting in more pollution. Our alternative provides a way to make sure that the target is met while supporting less established technologies, but it comes with a significantly higher consumer price. Furthermore, as an undesirable side effect, we observe that a cost reduction in a technology with a high banding (namely offshore wind) leads to more CO2 emissions under the UK banding policy and to higher consumer prices under the alternative banding policy.
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