IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v121y2018icp374-382.html
   My bibliography  Save this article

Valuing the carbon assets of distributed photovoltaic generation in China

Author

Listed:
  • Xu, Xinkuo
  • Guan, Chengmei
  • Jin, Jiayu

Abstract

Distributed photovoltaic generation has advantages in energy savings and emissions reduction, but its economic value is still unclear. This paper examines the carbon value of distributed photovoltaic generation, analyzes the influencing factors and further illustrates how these factors affect the value. First, it introduces the method of carbon asset valuation to distributed photovoltaic generation, which produces lower carbon emissions than most other energy sources. Second, based on mean estimates of the internal determining factors for the carbon assets of distributed photovoltaic generation, this paper provides an estimated value of the carbon assets. Third, under uncertain conditions and accounting for the time factor, it uses Monte Carlo simulation to analyze the sensitivity of the carbon asset value of distributed photovoltaic generation. The results indicate that (1) distributed photovoltaic generation has a carbon asset value; (2) the carbon asset value of distributed photovoltaic generation is determined by the carbon reduction level, the power generation capacity and the carbon price; and (3) carbon price fluctuations affect the carbon asset value of distributed photovoltaic generation much more than the power generation capacity. This paper provides academic support to promote carbon asset trading in distributed photovoltaic generation and for distributed photovoltaic generation to reduce carbon emissions.

Suggested Citation

  • Xu, Xinkuo & Guan, Chengmei & Jin, Jiayu, 2018. "Valuing the carbon assets of distributed photovoltaic generation in China," Energy Policy, Elsevier, vol. 121(C), pages 374-382.
    • Handle: RePEc:eee:enepol:v:121:y:2018:i:c:p:374-382
    DOI: 10.1016/j.enpol.2018.06.046
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301421518304348
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.enpol.2018.06.046?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Uddin, Gazi Salah & Hernandez, Jose Areola & Shahzad, Syed Jawad Hussain & Hedström, Axel, 2018. "Multivariate dependence and spillover effects across energy commodities and diversification potentials of carbon assets," Energy Economics, Elsevier, vol. 71(C), pages 35-46.
    2. Hancevic, Pedro I. & Nuñez, Hector M., 2017. "Distributed Photovoltaic Power Generation: A Widespread Application in the Mexican Residential Sector," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258129, Agricultural and Applied Economics Association.
    3. Jan Bebbington & Carlos Larrinaga-Gonzalez, 2008. "Carbon Trading: Accounting and Reporting Issues," European Accounting Review, Taylor & Francis Journals, vol. 17(4), pages 697-717.
    4. Luo, Guo-liang & Long, Cheng-feng & Wei, Xiao & Tang, Wen-jun, 2016. "Financing risks involved in distributed PV power generation in China and analysis of countermeasures," Renewable and Sustainable Energy Reviews, Elsevier, vol. 63(C), pages 93-101.
    5. Nerini, Francesco Fuso & Broad, Oliver & Mentis, Dimitris & Welsch, Manuel & Bazilian, Morgan & Howells, Mark, 2016. "A cost comparison of technology approaches for improving access to electricity services," Energy, Elsevier, vol. 95(C), pages 255-265.
    6. Holdermann, Claudius & Kissel, Johannes & Beigel, Jürgen, 2014. "Distributed photovoltaic generation in Brazil: An economic viability analysis of small-scale photovoltaic systems in the residential and commercial sectors," Energy Policy, Elsevier, vol. 67(C), pages 612-617.
    7. Zhang, Sufang, 2016. "Innovative business models and financing mechanisms for distributed solar PV (DSPV) deployment in China," Energy Policy, Elsevier, vol. 95(C), pages 458-467.
    8. Hancevic, Pedro I. & Nuñez, Hector M. & Rosellon, Juan, 2017. "Distributed photovoltaic power generation: Possibilities, benefits, and challenges for a widespread application in the Mexican residential sector," Energy Policy, Elsevier, vol. 110(C), pages 478-489.
    9. Han, Liyan & Liu, Yang & Lin, Qiang & Huang, Gubo, 2015. "Valuing carbon assets for high-tech with application to the wind energy industry," Energy Policy, Elsevier, vol. 87(C), pages 347-358.
    10. Kanamura, Takashi, 2016. "Role of carbon swap trading and energy prices in price correlations and volatilities between carbon markets," Energy Economics, Elsevier, vol. 54(C), pages 204-212.
    11. Reboredo, Juan C., 2014. "Volatility spillovers between the oil market and the European Union carbon emission market," Economic Modelling, Elsevier, vol. 36(C), pages 229-234.
    12. Mitscher, Martin & Rüther, Ricardo, 2012. "Economic performance and policies for grid-connected residential solar photovoltaic systems in Brazil," Energy Policy, Elsevier, vol. 49(C), pages 688-694.
    13. Wen, Xiaoqian & Bouri, Elie & Roubaud, David, 2017. "Can energy commodity futures add to the value of carbon assets?," Economic Modelling, Elsevier, vol. 62(C), pages 194-206.
    14. Huang, Yalin & Söder, Lennart, 2017. "Evaluation of economic regulation in distribution systems with distributed generation," Energy, Elsevier, vol. 126(C), pages 192-201.
    15. Holtmeyer, Melissa L. & Wang, Shuxiao & Axelbaum, Richard L., 2013. "Considerations for decision-making on distributed power generation in rural areas," Energy Policy, Elsevier, vol. 63(C), pages 708-715.
    16. Wang, Yudong & Guo, Zhuangyue, 2018. "The dynamic spillover between carbon and energy markets: New evidence," Energy, Elsevier, vol. 149(C), pages 24-33.
    17. He, Yongxiu & Pang, Yuexia & Li, Xinmin & Zhang, Minhui, 2018. "Dynamic subsidy model of photovoltaic distributed generation in China," Renewable Energy, Elsevier, vol. 118(C), pages 555-564.
    18. Brouwer, Anne Sjoerd & van den Broek, Machteld & Özdemir, Özge & Koutstaal, Paul & Faaij, André, 2016. "Business case uncertainty of power plants in future energy systems with wind power," Energy Policy, Elsevier, vol. 89(C), pages 237-256.
    19. Yinpeng Zhang & Zhixin Liu & Xueying Yu, 2017. "The Diversification Benefits of Including Carbon Assets in Financial Portfolios," Sustainability, MDPI, vol. 9(3), pages 1-13, March.
    20. Burtt, D. & Dargusch, P., 2015. "The cost-effectiveness of household photovoltaic systems in reducing greenhouse gas emissions in Australia: Linking subsidies with emission reductions," Applied Energy, Elsevier, vol. 148(C), pages 439-448.
    21. Zhao, Xingang & Zeng, Yiping & Zhao, Di, 2015. "Distributed solar photovoltaics in China: Policies and economic performance," Energy, Elsevier, vol. 88(C), pages 572-583.
    22. Sufang Zhang, . "Innovative Business Models and Financing Mechanisms for Distributed Solar Photovoltaic (DSPV) Deployment in China," Chapters, in: Shigeru Kimura & Youngho Chang & Yanfei Li (ed.), Financing Renewable Energy Development in East Asia Summit Countries A Primer of Effective Policy Instruments, chapter 6, pages 161-191, Economic Research Institute for ASEAN and East Asia (ERIA).
    23. Nomaguchi, Yutaka & Tanaka, Hiroki & Sakakibara, Akiyuki & Fujita, Kikuo & Kishita, Yusuke & Hara, Keishiro & Uwasu, Michinori, 2017. "Integrated planning of low-voltage power grids and subsidies toward a distributed generation system – Case study of the diffusion of photovoltaics in a Japanese dormitory town," Energy, Elsevier, vol. 140(P1), pages 779-793.
    24. Tian-tian Feng & Yi-sheng Yang & Yu-heng Yang & Dan-dan Wang, 2017. "Application Status and Problem Investigation of Distributed Generation in China: The Case of Natural Gas, Solar and Wind Resources," Sustainability, MDPI, vol. 9(6), pages 1-19, June.
    25. Camilo, Henrique Fernandes & Udaeta, Miguel Edgar Morales & Veiga Gimenes, André Luiz & Grimoni, Jose Aquiles Baesso, 2017. "Assessment of photovoltaic distributed generation – Issues of grid connected systems through the consumer side applied to a case study of Brazil," Renewable and Sustainable Energy Reviews, Elsevier, vol. 71(C), pages 712-719.
    26. Anaya, Karim L. & Pollitt, Michael G., 2017. "Going smarter in the connection of distributed generation," Energy Policy, Elsevier, vol. 105(C), pages 608-617.
    27. Lin He & Chang-Ling Li & Qing-Yun Nie & Yan Men & Hai Shao & Jiang Zhu, 2017. "Core Abilities Evaluation Index System Exploration and Empirical Study on Distributed PV-Generation Projects," Energies, MDPI, vol. 10(12), pages 1-18, December.
    28. Cook, Tyson & Shaver, Lee & Arbaje, Paul, 2018. "Modeling constraints to distributed generation solar photovoltaic capacity installation in the US Midwest," Applied Energy, Elsevier, vol. 210(C), pages 1037-1050.
    29. Dong, Jun & Feng, Tian-tian & Sun, Hong-xing & Cai, Hong-xin & Li, Rong & Yang, Yisheng, 2016. "Clean distributed generation in China: Policy options and international experience," Renewable and Sustainable Energy Reviews, Elsevier, vol. 57(C), pages 753-764.
    30. Bell, Keith & Gill, Simon, 2018. "Delivering a highly distributed electricity system: Technical, regulatory and policy challenges," Energy Policy, Elsevier, vol. 113(C), pages 765-777.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Liu, Yue & Tian, Lixin & Sun, Huaping & Zhang, Xiling & Kong, Chuimin, 2022. "Option pricing of carbon asset and its application in digital decision-making of carbon asset," Applied Energy, Elsevier, vol. 310(C).
    2. Xinkuo Xu & Xiaofeng Lv & Liyan Han, 2019. "Carbon Asset of Electrification: Valuing the Transition from Fossil Fuel-Powered Buses to Battery Electric Buses in Beijing," Sustainability, MDPI, vol. 11(10), pages 1-16, May.
    3. Song, Yazhi & Li, Yin & Liu, Tiansen, 2023. "Carbon asset remolding and potential benefit measurement of machinery products in the light of lean production and low-carbon investment," Technological Forecasting and Social Change, Elsevier, vol. 186(PB).
    4. Liu, Yue & Sun, Huaping & Meng, Bo & Jin, Shunlin & Chen, Bin, 2023. "How to purchase carbon emission right optimally for energy-consuming enterprises? Analysis based on optimal stopping model," Energy Economics, Elsevier, vol. 124(C).
    5. Ying Wang & Lidan Tian & Junrong Xia & Weishi Zhang & Kaifeng Zhang, 2020. "Economic Assessment of the Peer-to-Peer Trading Policy of Distributed PV Electricity: A Case Study in China," Sustainability, MDPI, vol. 12(13), pages 1-22, June.
    6. Tiantian Feng & Mingli Cui & Mengxi Zhang & Lili Liu, 2024. "How to Construct a Carbon Asset Management System for Chinese Power Enterprises: A Survey-Based Approach," Energies, MDPI, vol. 17(16), pages 1-35, August.
    7. Zhang, Minhui & Zhang, Qin & Zhou, Dequn & Wang, Lei, 2021. "Punishment or reward? Strategies of stakeholders in the quality of photovoltaic plants based on evolutionary game analysis in China," Energy, Elsevier, vol. 220(C).
    8. Xinkuo Xu & Liyan Han, 2020. "Operational Lifecycle Carbon Value of Bus Electrification in Macau," Sustainability, MDPI, vol. 12(9), pages 1-18, May.
    9. Zhang, Minhui & Zhang, Qin, 2020. "Grid parity analysis of distributed photovoltaic power generation in China," Energy, Elsevier, vol. 206(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Adekoya, Oluwasegun B. & Oliyide, Johnson A. & Noman, Ambreen, 2021. "The volatility connectedness of the EU carbon market with commodity and financial markets in time- and frequency-domain: The role of the U.S. economic policy uncertainty," Resources Policy, Elsevier, vol. 74(C).
    2. Demiralay, Sercan & Gencer, Hatice Gaye & Bayraci, Selcuk, 2022. "Carbon credit futures as an emerging asset: Hedging, diversification and downside risks," Energy Economics, Elsevier, vol. 113(C).
    3. Tan, Xueping & Sirichand, Kavita & Vivian, Andrew & Wang, Xinyu, 2020. "How connected is the carbon market to energy and financial markets? A systematic analysis of spillovers and dynamics," Energy Economics, Elsevier, vol. 90(C).
    4. Yang Liu & Xueqing Yang & Mei Wang, 2021. "Global Transmission of Returns among Financial, Traditional Energy, Renewable Energy and Carbon Markets: New Evidence," Energies, MDPI, vol. 14(21), pages 1-32, November.
    5. Yunna Wu & Jianli Zhou & Yong Hu & Lingwenying Li & Xiaokun Sun, 2018. "A TODIM-Based Investment Decision Framework for Commercial Distributed PV Projects under the Energy Performance Contracting (EPC) Business Model: A Case in East-Central China," Energies, MDPI, vol. 11(5), pages 1-27, May.
    6. Xu, Li & Zhang, Qin & Wang, Keying & Shi, Xunpeng, 2020. "Subsidies, loans, and companies' performance: evidence from China's photovoltaic industry," Applied Energy, Elsevier, vol. 260(C).
    7. Tian-tian Feng & Yi-sheng Yang & Yu-heng Yang & Dan-dan Wang, 2017. "Application Status and Problem Investigation of Distributed Generation in China: The Case of Natural Gas, Solar and Wind Resources," Sustainability, MDPI, vol. 9(6), pages 1-19, June.
    8. Li, Yan & Zhang, Qi & Wang, Ge & McLellan, Benjamin & Liu, Xue Fei & Wang, Le, 2018. "A review of photovoltaic poverty alleviation projects in China: Current status, challenge and policy recommendations," Renewable and Sustainable Energy Reviews, Elsevier, vol. 94(C), pages 214-223.
    9. Gargallo, Pilar & Lample, Luis & Miguel, Jesús A. & Salvador, Manuel, 2024. "Sequential management of energy and low-carbon portfolios," Research in International Business and Finance, Elsevier, vol. 69(C).
    10. Jiang, Wei & Chen, Yunfei, 2022. "The time-frequency connectedness among carbon, traditional/new energy and material markets of China in pre- and post-COVID-19 outbreak periods," Energy, Elsevier, vol. 246(C).
    11. Liu, Jianing & Man, Yuanyuan & Dong, Xiuliang, 2023. "Tail dependence and risk spillover effects between China's carbon market and energy markets," International Review of Economics & Finance, Elsevier, vol. 84(C), pages 553-567.
    12. Kayser, Dirk, 2016. "Solar photovoltaic projects in China: High investment risks and the need for institutional response," Applied Energy, Elsevier, vol. 174(C), pages 144-152.
    13. Shali Wang & Jiaxi Wu & Yunan Peng & Jane Xu & Lisa Leinonen & Yuyu Wang & Zheng Meng, 2022. "Influence of Residential Photovoltaic Promotion Policy on Installation Intention in Typical Regions of China," Sustainability, MDPI, vol. 14(14), pages 1-30, July.
    14. Wang, Xiaozhen & Zheng, Ying & Jiang, Zihao & Tao, Ziyang, 2021. "Influence mechanism of subsidy policy on household photovoltaic purchase intention under an urban-rural divide in China," Energy, Elsevier, vol. 220(C).
    15. Wu, Xinyu & Jiang, Zhengting, 2023. "Time-varying asymmetric volatility spillovers among China’s carbon markets, new energy market and stock market under the shocks of major events," Energy Economics, Elsevier, vol. 126(C).
    16. Hanif, Waqas & Arreola Hernandez, Jose & Mensi, Walid & Kang, Sang Hoon & Uddin, Gazi Salah & Yoon, Seong-Min, 2021. "Nonlinear dependence and connectedness between clean/renewable energy sector equity and European emission allowance prices," Energy Economics, Elsevier, vol. 101(C).
    17. Yu Zeng & Weidong Chen, 2019. "The Determination of Concession Period for Build-Operate-Transfer Solar Photovoltaic Power Project under Policy Incentives: A Case Study of China," Energies, MDPI, vol. 12(18), pages 1-23, September.
    18. Lin He & Chang-Ling Li & Qing-Yun Nie & Yan Men & Hai Shao & Jiang Zhu, 2017. "Core Abilities Evaluation Index System Exploration and Empirical Study on Distributed PV-Generation Projects," Energies, MDPI, vol. 10(12), pages 1-18, December.
    19. Zhou, Yuqin & Wu, Shan & Zhang, Zeyi, 2022. "Multidimensional risk spillovers among carbon, energy and nonferrous metals markets: Evidence from the quantile VAR network," Energy Economics, Elsevier, vol. 114(C).
    20. Xin-gang, Zhao & Yi-min, Xie, 2019. "The economic performance of industrial and commercial rooftop photovoltaic in China," Energy, Elsevier, vol. 187(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:121:y:2018:i:c:p:374-382. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/enpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.