Two-stage joint equilibrium model of electricity market with tradable green certificates

Abstract

Renewable portfolio standard (RPS) with tradable green certificate (TGC) scheme has important influences on the market equilibrium outcomes and generation firms’ strategic behaviors. The main objective of this paper is to investigate that under the RPS with TGC scheme, who and how to exercise the market power, and to what extent market powers are exercised in the electricity wholesale and TGC markets. This is achieved by firstly proposing a two-stage joint equilibrium model based on the oligopolistic competition equilibrium theory. The model is then formulated as an equilibrium problem with equilibrium constraints (EPEC) by using the backward induction method, which is further solved by the nonlinear complementarity approach. Finally, simulation results show that renewable firms tend to withhold some of TGCs to raise the TGC prices when the RPS is relatively low, otherwise they choose to cut down their electricity output to reduce the volume of TGC and raise the TGC price. Moreover, facing the increasing TGC price, fossil fuel firms tend to withhold their electricity output to decrease the demand of TGCs and lower the TGC price. This study has meaningful implications for design of the electricity markets with TGC market.

Optimal Decision-Making of Trans-Provincial Electricity Market Subjects with Risks under Renewable Portfolio Standards

“…To analyze the implementation effect of the RPS mechanism, some previous studies [8][9][10] analyzed the interaction between the TGC and electricity markets and the incentive effect of the RPS mechanism on TGC, by using a system dynamics model. In addition, some studies [11,12] analyzed the effect of TGC price on electricity market subjects, such as renewable and conventional energy companies, based on the RPS mechanism. Through an empirical analysis of the RPS mechanism, an effective consumption of renewable energy under the RPS mechanism can be promoted.…”

Effects of herding behavior of tradable green certificate market players on market efficiency: insights from heterogeneous agent model

“…Vogstad et al discovered that the instabilities of TGC market arose endogenously from the trading strategies, but some regulatory rules such as banking and borrowing could reduce it [20]. An et al explored the behaviors of market players in TGC market and their impacts on TGC price [21].…”

Long-Term Bidding Scheduling of a Price-Maker Cascade Hydropower Station Based on Supply Function Equilibrium

“…ere have been many solution methods, such as interior point method with penalty term [14,19], heuristics and iterative procedures [15,20,21], and the nonlinear complementarity approach [8,[22][23][24][25][26][27]. At present, there has been much research into this topic [8,[14][15][16][17][18][19][20][21][22][23][24]28].…”

“…ere have been many solution methods, such as interior point method with penalty term [14,19], heuristics and iterative procedures [15,20,21], and the nonlinear complementarity approach [8,[22][23][24][25][26][27]. At present, there has been much research into this topic [8,[14][15][16][17][18][19][20][21][22][23][24]28]. However, most of them are applied in the electricity market with only thermoelectric systems and are based on the market-wide equilibrium at a certain point in time.…”