Market Power and Welfare in Electricity Markets Employing Tradable Green Certificate Systems

Currier, Kevin M.; Yan-ming, Sun

doi:10.1007/s11294-014-9463-2

Cited by 7 publications

(4 citation statements)

References 14 publications

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“…In other words, in all scenarios the maximum of social welfare does not happen when all the electricity supply is generated from the green sources (a ¼ 100%Þ. This result is in accordance with Currier (2013) and Currier and Sun (2014). In the fixed TGC price polices, in the first, by increasing of the minimum quota, the social welfare will increase with a faster slope compared with the market TGC price polices.…”

Section: Social Welfaresupporting

confidence: 73%

Evaluating different scenarios for Tradable Green Certificates by game theory approaches

Ghaffari

Hafezalkotob

2018

J Ind Eng Int

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Right now employment of polices and tools to decrease the carbon emission through electricity generation from renewable resources is one of the most important problem in energy policy. Tradable Green Certificate (TGC) is an economics mechanism to support green power generation. Any country has the challenge to choose an appropriate policy and mechanism for design and implementation of TGC. The purpose of this study is to help policy makers to design and choose the best scenario of TGC by evaluating six scenarios, based on game theory approach. This study will be useful for increasing the effectiveness of TGC system in interaction with electricity market. Particularly, the competition between thermal and renewable power plants is modeled by mathematical modeling tools such as cooperative games like Nash and Stackelberg. Each game is modeled by taking into account of the two following policies. The results of the six scenarios and the sensitivity analysis of some key parameters have been evaluated by numerical studies. Finally, in order to evaluate the scenarios we calculated the level of social welfare in the all scenarios. The results of all models demonstrate that when the green electricity share (minimum requirement) increases the TGC price decreases. Moreover, in all scenarios when the minimum requirement is 100% then the maximum level of social welfare is not met. Also when the minimum requirement is less than 50%, the scenarios with the market TGC price policy have more social welfare in comparison with the scenarios with fixed TGC price policy.

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Section: Social Welfaresupporting

confidence: 73%

Evaluating different scenarios for Tradable Green Certificates by game theory approaches

Ghaffari

Hafezalkotob

2018

J Ind Eng Int

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“…In addition, assume that C 1x (x 1 ) = a 1 x 2 1 a 2 x 2 2 2 , C 1y = b 1 y 2 1 2 , C 2y = b 2 y 2 2 2 , and D = (θ 1 y 1 + θ 2 y 2 ) 2 , where a 1 , a 2 , b 1 , b 2 > 0, and θ 1 , θ 2 > 0 are parameters reflecting the emissions intensities in country 1 and country 2. Following the numerical examples in Currier et al (2012), Currier and Sun (2014), and Currier (2015), we first assume the following parameter values: A 1 = 25, A 2 = 32, a 1 = 15, a 2 = 18, b 1 = 9, b 2 = 7 and θ 1 = 7 11 , θ 2 = 8 11 . The asymmetric cost functions for these two countries reflect that country 1 has the comparative advantage in producing renewable output (green electricity exporter), and black production in country 2 is comparatively cheaper (green electricity importer).…”

Section: Illustrative Example and Supportive Evidencementioning

confidence: 99%

“…In this paper, based on the electricity duopoly in Currier et al [15] and the Cournot electricity oligopoly framework by Currier and Sun [16], we construct a stylized theoretical model with numerical simulations to analyze the strategic competition behavior of two countries with cross-border environmental damages under full separation and full integration of their electricity markets and TGC markets. Under full separation, the two countries with the common border have their independent national electricity markets and green certificate markets.…”

Section: Introductionmentioning

confidence: 99%

Full Separation or Full Integration? An Investigation of the Optimal Renewables Policy Employing Tradable Green Certificate Systems in Two Countries’ Electricity Markets

Yan-ming

Lin

2019

IJERPH

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Tradable green certificate (TGC) systems are increasingly used to promote renewable energy generation and mitigate greenhouse gas emissions. In this paper, we investigate the performance of the optimal renewables policy under full separation and full integration scenarios for two countries with TGCs. Our analysis suggests that under full separation, one country’s optimal renewable quota, which maximizes its own welfare, is strategically substitutional for the other country’s in a Cournot Nash equilibrium of the monopolistic market, when cross-border pollution exists. A country tends to become the “leader” in the market by using an information advantage to gain higher welfare. Using geometric illustrations we demonstrate the possibility that a potentially fully integrated electricity market under a TGC system can improve welfare for each country, when compensation between the countries is possible. From a policy point of view, this is significant in support of the demand for a convergence of national renewable policy schemes, where countries cooperate on solving cross-border environmental problems.

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“…We adopted profit functions proposed by Currier and Sun (2014), and considering relation between wholesale price and end-user price of electricity explained by Amundsen and Bergman (2012). In their model, producer of green electricity can sell both electricity generated on the electricity market as well as certificates on separate market.…”

Section: Model Formulationmentioning

confidence: 99%

Analysis of implementation of Tradable Green Certificates system in a competitive electricity market: a game theory approach

2015

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This paper investigates three models to implement Tradable Green Certificates (TGC) system with aid of game theory approach. In particular, the competition between thermal and renewable power plants is formulated in three models: namely cooperative, Nash and Stackelberg game models. The price of TGC is assumed to be determined by the legislative body (government) which is fixed. Numerical examples presented in this paper include sensitivity analysis of some key parameters and comparison of the results of different models. In all three game models, the parameters that influence pricing of the TGC based on the optimal amounts are obtained. The numerical examples demonstrate that in all models: there is a reverse relation between the price of electricity and the TGC price, as well as a direct relation between the price of electricity and the share of green electricity in total electricity generation. It is found that Stackelberg model is an appropriate structure to implement the TGC system. In this model, the supply of electricity and the production of green electricity are at the highest level, while the price of electricity is at the lowest levels. In addition, payoff of the thermal power plant is at the highest levels in the Nash model. Hence this model can be an applicatory structure for implementation of the TGC system in developing countries, where the number of thermal power plants is significantly greater than the number of renewable power plants.

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Market Power and Welfare in Electricity Markets Employing Tradable Green Certificate Systems

Cited by 7 publications

References 14 publications

Evaluating different scenarios for Tradable Green Certificates by game theory approaches

Evaluating different scenarios for Tradable Green Certificates by game theory approaches

Full Separation or Full Integration? An Investigation of the Optimal Renewables Policy Employing Tradable Green Certificate Systems in Two Countries’ Electricity Markets

Analysis of implementation of Tradable Green Certificates system in a competitive electricity market: a game theory approach

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