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Green Certificates and Market Power on the Nordic Power Market


  • Eirik S. Amundsen and Lars Bergman


The purpose of this study is to elucidate under which circumstances, how, and to what extent market power on a Tradable Green Certificates (TGC) market can be used to affect an entire electricity market. There are basically two reasons for being concerned with this. One is that a small number of companies may have exclusive access to first rate sites for wind power generation. The other is that withdrawal of a small number of TGCs implies a multiple reduction of electricity consumption, with corresponding increases of end user prices. We formulate both an analytical model to investigate economic principles and a numerical model based on that to investigate the Swedish TGC market operating in a setting of a common Nordic electricity market. The analysis shows that Swedish producers may exercise market power using the TGC-market but that this problem will be eliminated by opening the TGC-market for other Nordic countries.

Suggested Citation

  • Eirik S. Amundsen and Lars Bergman, 2012. "Green Certificates and Market Power on the Nordic Power Market," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
  • Handle: RePEc:aen:journl:33-2-05

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    References listed on IDEAS

    1. Thure Traber & Claudia Kemfert, 2009. "Impacts of the German Support for Renewable Energy on Electricity Prices, Emissions, and Firms," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 155-178.
    2. Amundsen, Eirik S. & Nese, Gjermund, 2004. "Market Power in Interactive Environmental and Energy Markets: The case of Green Certificates," MPRA Paper 10559, University Library of Munich, Germany.
    3. Amundsen, Eirik S. & Nese, Gjermund, 2004. "Market power in interactive environmental and energy markets: The case of Green Certificates," Working Papers in Economics 14/04, University of Bergen, Department of Economics.
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    Cited by:

    1. Siddiqui, Afzal S. & Tanaka, Makoto & Chen, Yihsu, 2016. "Are targets for renewable portfolio standards too low? The impact of market structure on energy policy," European Journal of Operational Research, Elsevier, vol. 250(1), pages 328-341.
    2. D’Amato, Alessio & Valentini, Edilio & Zoli, Mariangela, 2017. "Tradable quota taxation and market power," Energy Economics, Elsevier, vol. 63(C), pages 248-252.
    3. Kamiński, Jacek, 2014. "A blocked takeover in the Polish power sector: A model-based analysis," Energy Policy, Elsevier, vol. 66(C), pages 42-52.
    4. Thomas P. Tangerås, 2015. "Renewable Electricity Policy and Market Integration," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4).
    5. Choi, Dong Gu & Park, Sang Yong & Hong, Jong Chul, 2015. "Quantitatively exploring the future of renewable portfolio standard in the Korean electricity sector via a bottom-up energy model," Renewable and Sustainable Energy Reviews, Elsevier, vol. 50(C), pages 793-803.
    6. Fridolfsson, Sven-Olof & Tangerås, Thomas P., 2013. "A reexamination of renewable electricity policy in Sweden," Energy Policy, Elsevier, vol. 58(C), pages 57-63.
    7. Tanaka, Makoto & Chen, Yihsu, 2013. "Market power in renewable portfolio standards," Energy Economics, Elsevier, vol. 39(C), pages 187-196.
    8. Jaraitė, Jūratė & Kažukauskas, Andrius, 2013. "The profitability of electricity generating firms and policies promoting renewable energy," Energy Economics, Elsevier, vol. 40(C), pages 858-865.
    9. Dressler, Luisa, 2016. "Support schemes for renewable electricity in the European Union: Producer strategies and competition," Energy Economics, Elsevier, vol. 60(C), pages 186-196.
    10. Christoph Böhringer & Manuela Behrens, 2015. "Interactions of emission caps and renewable electricity support schemes," Journal of Regulatory Economics, Springer, vol. 48(1), pages 74-96, August.
    11. Darmani, Anna & Rickne, Annika & Hidalgo, Antonio & Arvidsson, Niklas, 2016. "When outcomes are the reflection of the analysis criteria: A review of the tradable green certificate assessments," Renewable and Sustainable Energy Reviews, Elsevier, vol. 62(C), pages 372-381.
    12. Fagiani, Riccardo & Hakvoort, Rudi, 2014. "The role of regulatory uncertainty in certificate markets: A case study of the Swedish/Norwegian market," Energy Policy, Elsevier, vol. 65(C), pages 608-618.
    13. repec:aen:journl:ej38-si1-argentiero is not listed on IDEAS
    14. Erik Gawel & Alexandra Purkus & Klaas Korte & Paul Lehmann, 2013. "Förderung der Markt- und Systemintegration erneuerbarer Energien: Perspektiven einer instrumentellen Weiterentwicklung," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 82(3), pages 123-136.
    15. repec:eee:eneeco:v:67:y:2017:i:c:p:387-399 is not listed on IDEAS

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    JEL classification:

    • F0 - International Economics - - General


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