Market performance and distributional effects on renewable energy markets
A renewable obligation combined with tradable renewable energy certificates is a market-based instrument used to promote the production of electricity from renewable energy sources. A renewable obligation is an alternative for subsidies. A renewable obligation will only be an efficient instrument if certificate markets are efficient. This requires that there is no market power and no anti-competitive behaviour on the certificate market. If the current developments in Dutch renewable energy production continue, market power on a future renewable certificate market in the Netherlands will probably not be an issue, even if the RO should only rest on the retail market instead of on the whole electricity market. A renewable obligation will raise the retail price for consumers, thereby reducing consumer surplus. Simulations show that the retail electricity price increases with € 30 per MWh to a level of € 104 per MWh in case of a 30% renewable target. Consumer surplus is reduced with 19% compared to the baseline scenario. In contrast, a subsidy such as the Dutch SDE which is financed from the state budget has the effect to (slightly) lower the retail electricity price, thereby increasing consumer surplus. It should however be realised that the costs of the subsidy will indirectly affect electricity consumers through their tax payments.
|Date of creation:||Aug 2009|
|Date of revision:|
|Contact details of provider:|| Postal: Postbus 80510, 2508 GM Den Haag|
Phone: (070) 338 33 80
Fax: (070) 338 33 50
Web page: http://www.cpb.nl/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Klessmann, Corinna & Nabe, Christian & Burges, Karsten, 2008. "Pros and cons of exposing renewables to electricity market risks--A comparison of the market integration approaches in Germany, Spain, and the UK," Energy Policy, Elsevier, vol. 36(10), pages 3646-3661, October.
- Eirik S. Amundsen & Fridrik M. Baldursson & Jørgen Birk Mortensen, 2005.
"Price Volatility and Banking in Green Certificate Markets,"
05-08, University of Copenhagen. Department of Economics.
- Eirik Amundsen & Fridrik Baldursson & Jørgen Mortensen, 2006. "Price Volatility and Banking in Green Certificate Markets," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 35(4), pages 259-287, December.
- Amundsen, Eirik S. & Baldursson, Fridrik M. & Mortensen, Jørgen Birk, 2003. "Price Volatility and Banking in Green Certificate Markets," Working Papers in Economics 02/03, University of Bergen, Department of Economics.
- Menanteau, Philippe & Finon, Dominique & Lamy, Marie-Laure, 2003. "Prices versus quantities: choosing policies for promoting the development of renewable energy," Energy Policy, Elsevier, vol. 31(8), pages 799-812, June.
- Torstein Bye, 2003. "On the Price and Volume Effects from Green Certificates in the Energy Market," Discussion Papers 351, Statistics Norway, Research Department.
- Johnston, Angus & Kavali, Amalia & Neuhoff, Karsten, 2008.
"Take-or-pay contracts for renewables deployment,"
Elsevier, vol. 36(7), pages 2481-2503, July.
- Amundsen, E.S. & Mortensen, J.B., 2001. "The Danish Green Certificate System: Some Simple Analytical Results," Norway; Department of Economics, University of Bergen 226, Department of Economics, University of Bergen.
- Mitchell, C. & Bauknecht, D. & Connor, P.M., 2006. "Effectiveness through risk reduction: a comparison of the renewable obligation in England and Wales and the feed-in system in Germany," Energy Policy, Elsevier, vol. 34(3), pages 297-305, February.
- Munksgaard, Jesper & Morthorst, Poul Erik, 2008. "Wind power in the Danish liberalised power market--Policy measures, price impact and investor incentives," Energy Policy, Elsevier, vol. 36(10), pages 3940-3947, October.
- Lemming, Jacob, 2003. "Financial risks for green electricity investors and producers in a tradable green certificate market," Energy Policy, Elsevier, vol. 31(1), pages 21-32, January.
- Kildegaard, Arne, 2008. "Green certificate markets, the risk of over-investment, and the role of long-term contracts," Energy Policy, Elsevier, vol. 36(9), pages 3413-3421, September.
- Michiel Bijlsma & Viktoria Kocsis & Victoria Shestalova & Gijsbert Zwart, 2008. "Vertical foreclosure: a policy framework," CPB Document 157, CPB Netherlands Bureau for Economic Policy Analysis.
- Michael D. Whinston, 2001. "Exclusivity and Tying in U.S. v. Microsoft: What We Know, and Don't Know," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 63-80, Spring.
- Palmer, Karen & Burtraw, Dallas, 2005.
"Cost-effectiveness of renewable electricity policies,"
Elsevier, vol. 27(6), pages 873-894, November.
- Burtraw, Dallas & Palmer, Karen, 2005. "Cost-Effectiveness of Renewable Electricity Policies," Discussion Papers dp-05-01, Resources For the Future.
- Neuhoff, K., 2004.
"Large Scale Deployment of Renewables for Electricity Generation,"
Cambridge Working Papers in Economics
0460, Faculty of Economics, University of Cambridge.
- Karsten Neuhoff, 2005. "Large-Scale Deployment of Renewables for Electricity Generation," Oxford Review of Economic Policy, Oxford University Press, vol. 21(1), pages 88-110, Spring.
- Amundsen, Eirik S. & Mortensen, Jorgen Birk, 2001. "The Danish Green Certificate System: some simple analytical results," Energy Economics, Elsevier, vol. 23(5), pages 489-509, September.
- Butler, Lucy & Neuhoff, Karsten, 2008.
"Comparison of feed-in tariff, quota and auction mechanisms to support wind power development,"
Elsevier, vol. 33(8), pages 1854-1867.
- Butler, L. & Neuhoff, K., 2005. "Comparison of Feed in Tariff, Quota and Auction Mechanisms to Support Wind Power Development," Cambridge Working Papers in Economics 0503, Faculty of Economics, University of Cambridge.
- Agnolucci, Paolo, 2007. "The effect of financial constraints, technological progress and long-term contracts on tradable green certificates," Energy Policy, Elsevier, vol. 35(6), pages 3347-3359, June.
When requesting a correction, please mention this item's handle: RePEc:cpb:docmnt:190. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.