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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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