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The Impact of Carbon Trading Market on the Layout Decision of Renewable Energy Investment—Theoretical Modeling and Case Study

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  • Ning Yan

    (Jiaxing Hengchuang Electric Power Design & Institute Co., Ltd., Jiaxing 314100, China)

  • Shenhai Huang

    (Jiaxing Hengchuang Electric Power Design & Institute Co., Ltd., Jiaxing 314100, China)

  • Yan Chen

    (Jiaxing Hengchuang Electric Power Design & Institute Co., Ltd., Jiaxing 314100, China)

  • Daini Zhang

    (Jiaxing Hengchuang Electric Power Design & Institute Co., Ltd., Jiaxing 314100, China)

  • Qin Xu

    (School of Economics and Finance, Xi’an Jiaotong University, Xi’an 710049, China)

  • Xiangyi Yang

    (School of Economics and Finance, Xi’an Jiaotong University, Xi’an 710049, China)

  • Shiyan Wen

    (School of Economics, Xi’an University of Finance and Economics, Xi’an 710003, China)

Abstract

The Carbon Emissions Trading System (ETS) serves as a market-based mechanism to drive renewable energy (RE) investments, yet its heterogeneous impacts on different stakeholders remain underexplored. This paper treats the carbon market as an exogenous shock and develops a multi-agent equilibrium model incorporating carbon pricing, encompassing power generation enterprises, power transmission enterprises, power consumers, and the government, to analyze how carbon prices reshape RE investment layouts under dual-carbon goals. Using panel data from Zhejiang Province (2017–2022), a high-energy-consumption region with 25% net electricity imports, we simulate heterogeneous responses of agents to carbon price fluctuations (CNY 50–250/ton). The results show that RE on-grid electricity increases (+0.55% to +2.89%), while thermal power declines (–4.98% to −15.39%) on the generation side. Transmission-side RE sales rise (+3.25% to +9.74%), though total electricity sales decrease (−0.49% to −2.22%). On the consumption side, RE self-generation grows (+2.12% to +5.93%), yet higher carbon prices reduce overall utility (−0.44% to −2.05%). Furthermore, external electricity integration (peaking at 28.5% of sales in 2020) alleviates provincial entities’ carbon cost pressure under high carbon prices. This study offers systematic insights for renewable energy investment decisions and policy optimization.

Suggested Citation

  • Ning Yan & Shenhai Huang & Yan Chen & Daini Zhang & Qin Xu & Xiangyi Yang & Shiyan Wen, 2025. "The Impact of Carbon Trading Market on the Layout Decision of Renewable Energy Investment—Theoretical Modeling and Case Study," Energies, MDPI, vol. 18(15), pages 1-30, July.
  • Handle: RePEc:gam:jeners:v:18:y:2025:i:15:p:3950-:d:1708816
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