Norbert Azuma - Dicke , IER , University of Stuttgart

Abstract

(max. 2000 char.): This report is Deliverable 4.1 of the EU project " Wind Power Integration in Liberalised Electricity Markets " (WILMAR) and describes the application of two policy instruments, Tradable Emissions Permits (TEP's) and Tradable Green Certificates (TGC's) for electricity produced from renewable energy sources in the European Union and the implications for implementation in the Wilmar model. The introduction of a common emission-trading system in the EU is expected to have an upward effect on the spot prices at the electricity market. The variations of the spot price imply that some types of power generation may change the situation from earning money to losing money despite the increasing spot price. Heavy restrictions on emissions penalise the fossil-fuelled technologies significantly, and the associated increase in the spot price need not compensate for this. Therefore, a market of TEP's is expected to have a significant influence on the electricity spot price. However, the expected price level of TEP's are met with great uncertainty and a study of a number of economical studies shows a price span between zero and 270 USD per ton of CO 2 depending on the participation or non-participation of countries in the scheme. The price-determination at the TGC market is expected to be closely related to the price at the power spot market as the RE-producers of electricity will have expectations to the total price paid for the energy produced, i.e., for the price of electricity at the spot market plus the price per kWh obtained at the green certificate market. In the Wilmar model, the TGC market can either be handled exogenously, i.e., the increase in renewable capacity and an average annual TGC price are determined outside the model, or a simple TGC module is developed, including the long-term supply functions for the most relevant renewable technologies and an overall TGC quota. Both solutions are rather simple, but to develop a more advanced model for the TGC market seems to be out of scope for handling the interplay with the Wilmar model. The obligation for the TGC market is normally given on an annual basis, i.e., the certificate quota has to be fulfilled within a given year. This implies that to establish a TGC price on an hourly basis throughout the year is not only difficult, but irrelevant as well. The incorporation of model elements representing an annual quota for emission and deriving a TEP …

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Cite this paper

@inproceedings{Morthorst2004NorbertA, title={Norbert Azuma - Dicke , IER , University of Stuttgart}, author={Poul Erik Morthorst and Hans F. Ravn and Rune Schmidt and Christoph Weber}, year={2004} }