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Kvikt likan af vistvænum raforkumarkadi
[An analytic model of an environmentally friendly electricity market]

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  • Amundsen, Eirik S.
  • Baldursson, Fridrik M.

Abstract

There is concern that prices in a market for Green Certificates (GCs) primarily based on volatile wind power will fluctuate excessively, leading to corresponding volatility of electricity prices. Applying a rational expectations simulation model of competitive storage and speculation of GCs the paper shows that the introduction of banking of GCs may reduce price volatility considerably and lead to increased social surplus. Banking lowers average prices and is therefore not necessarily to the benefit of “green producers”. Proposed price bounds on GC-prices will reduce the importance of banking and even of the GC system itself.

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File URL: http://mpra.ub.uni-muenchen.de/10772/
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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 10772.

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Date of creation: 2003
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Publication status: Published in Icelandic Journal of Science and Mathematics 2.1(2003): pp. 1-9
Handle: RePEc:pra:mprapa:10772

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Related research

Keywords: Electricity; Environment; Commodity Speculation; Green Certificates; Marketable permits; Uncertainty;

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  1. Deaton, Angus & Laroque, Guy, 1992. "On the Behaviour of Commodity Prices," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 59(1), pages 1-23, January.
  2. Williams,Jeffrey C. & Wright,Brian D., 2005. "Storage and Commodity Markets," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521023399.
  3. Morthorst, P. E., 2000. "The development of a green certificate market," Energy Policy, Elsevier, Elsevier, vol. 28(15), pages 1085-1094, December.
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