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

Author

Listed:
  • 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.

Suggested Citation

  • Amundsen, Eirik S. & Baldursson, Fridrik M., 2003. "Kvikt likan af vistvænum raforkumarkadi [An analytic model of an environmentally friendly electricity market]," MPRA Paper 10772, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:10772
    as

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    File URL: https://mpra.ub.uni-muenchen.de/10772/1/MPRA_paper_10772.pdf
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    References listed on IDEAS

    as
    1. Morthorst, P. E., 2000. "The development of a green certificate market," Energy Policy, Elsevier, vol. 28(15), pages 1085-1094, December.
    2. Williams,Jeffrey C. & Wright,Brian D., 2005. "Storage and Commodity Markets," Cambridge Books, Cambridge University Press, number 9780521023399, January.
    3. Angus Deaton & Guy Laroque, 1992. "On the Behaviour of Commodity Prices," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 59(1), pages 1-23.
    Full references (including those not matched with items on IDEAS)

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    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

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