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Green Certificates and Market Power on the Nordic Power Market

Eirik S. Amundsen and Lars Bergman

Year: 2012
Volume: Volume 33
Number: Number 2
DOI: 10.5547/01956574.33.2.5
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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. We formulate 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. Keywords: Renewable energy, Electricity, Green certificates, Market power, Nordic power market



Simultaneous use of black, green, and white certificate systems

Eirik S. Amundsen and Torstein Bye

Year: 2018
Volume: Volume 39
Number: Number 4
DOI: 10.5547/01956574.39.4.eamu
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Abstract:
We formulate a long run model with black, green and white certificate markets that function in conjunction with an electricity market. The markets function well together in the sense that a common equilibrium solution exists, where all targets are satisfied (e.g., the share of green electricity and share of energy saving/ efficiency increase). The equilibrium solution adapts to changing targets but it is, in general, impossible to tell whether this will lead to more, less, or unchanged consumption of "black," "green" or "white" electricity. Hence, if the long run target is to expand the capacity of green electricity generation and energy savings to certain given levels, then these markets may not be the best to use. To obtain clear results, specific parameter values and functional forms are needed. An example based on Norwegian data is provided. In addition, gains and losses in terms of consumers' and producers' surpluses are calculated.





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