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Green Certificates and Market Power on the Nordic Power Market

Author

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  • Eirik S. Amundsen
  • Lars Bergman

Abstract

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. Wefor-mulate 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 & Lars Bergman, 2012. "Green Certificates and Market Power on the Nordic Power Market," The Energy Journal, , vol. 33(2), pages 101-118, April.
    • Handle: RePEc:sae:enejou:v:33:y:2012:i:2:p:101-118
    DOI: 10.5547/01956574.33.2.5
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    References listed on IDEAS

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    1. Amundsen, Eirik S. & Nese, Gjermund, 2009. "Integration of tradable green certificate markets: What can be expected?," Journal of Policy Modeling, Elsevier, vol. 31(6), pages 903-922, November.
    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.
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