IDEAS home Printed from https://ideas.repec.org/a/gam/jeners/v16y2023i8p3517-d1126556.html
   My bibliography  Save this article

Assessing the Effects of Tradable Green Certificates and Renewable Portfolio Standards through Demand-Side Decision-Making Simulation: A Case of a System Containing Photovoltaic Power

Author

Listed:
  • Yanbin Xu

    (School of Economics and Management, North China Electric Power University, Changping District, Beijing 102206, China)

  • Jiaxin Ma

    (School of Economics and Management, North China Electric Power University, Changping District, Beijing 102206, China)

  • Yuqing Wang

    (Department of Economic Management, North China Electric Power University, Baoding 071003, China)

  • Ming Zeng

    (School of Economics and Management, North China Electric Power University, Changping District, Beijing 102206, China)

Abstract

Understanding the effect of a tradable green certificate (TGC) and renewable portfolio standard (RPS) policy mix is of great importance for sustainable renewable-energy development and carbon neutrality, given that the demand side subjects are the responsible subjects under China’s RPSs and studies from the demand-side perspective are relatively limited. To fill this gap, this paper analyzes the coupled relationship between the TGC market and the electricity market as well as the reflexivity of the TGC market. Meanwhile, on the basis of modeling TGC prices and renewable-energy uncertainty, this paper constructs a Markov decision process (MDP) model to simulate the sequential decision-making process of the demand side and further proposes a solution model based on dynamic programming and evolutionary algorithms. The results show that: (1) In addition to policy parameters such as RPS weight, TGC price caps and penalties, a preference for short-term benefits and renewable-energy uncertainty also affect transaction behaviors on the demand side. (2) Increasing RPS weight within an appropriate range can stimulate demand for renewable power and TGC, while excessively low RPS weight will result in accumulation of unsold TGC. In addition, the preference for short-term benefits can stimulate demand for renewable power and curb demand for TGC. (3) An increase in the TGC price cap can stimulate demand for renewable power and restrain demand for TGC, but this phenomenon may not exist when RPS weight is too low or responsible subjects prefer short-term benefits. (4) Setting a penalty of no less than the TGC price cap is of great significance to ensure the operation of the TGC market and RPSs.

Suggested Citation

  • Yanbin Xu & Jiaxin Ma & Yuqing Wang & Ming Zeng, 2023. "Assessing the Effects of Tradable Green Certificates and Renewable Portfolio Standards through Demand-Side Decision-Making Simulation: A Case of a System Containing Photovoltaic Power," Energies, MDPI, vol. 16(8), pages 1-29, April.
    • Handle: RePEc:gam:jeners:v:16:y:2023:i:8:p:3517-:d:1126556
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1996-1073/16/8/3517/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/1996-1073/16/8/3517/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Fan, Jing-Li & Wang, Jia-Xing & Hu, Jia-Wei & Wang, Yu & Zhang, Xian, 2019. "Optimization of China’s provincial renewable energy installation plan for the 13th five-year plan based on renewable portfolio standards," Applied Energy, Elsevier, vol. 254(C).
    2. Song, Xiao-hua & Han, Jing-jing & Zhang, Lu & Zhao, Cai-ping & Wang, Peng & Liu, Xiao-yan & Li, Qiao-chu, 2021. "Impacts of renewable portfolio standards on multi-market coupling trading of renewable energy in China: A scenario-based system dynamics model," Energy Policy, Elsevier, vol. 159(C).
    3. Marchenko, O.V., 2008. "Modeling of a green certificate market," Renewable Energy, Elsevier, vol. 33(8), pages 1953-1958.
    4. Tu, Qiang & Betz, Regina & Mo, Jianlei & Fan, Ying, 2019. "The profitability of onshore wind and solar PV power projects in China - A comparative study," Energy Policy, Elsevier, vol. 132(C), pages 404-417.
    5. Zhu, Chaoping & Fan, Ruguo & Lin, Jinchai, 2020. "The impact of renewable portfolio standard on retail electricity market: A system dynamics model of tripartite evolutionary game," Energy Policy, Elsevier, vol. 136(C).
    6. Coulon, Michael & Khazaei, Javad & Powell, Warren B., 2015. "SMART-SREC: A stochastic model of the New Jersey solar renewable energy certificate market," Journal of Environmental Economics and Management, Elsevier, vol. 73(C), pages 13-31.
    7. Tu, Qiang & Mo, Jianlei & Betz, Regina & Cui, Lianbiao & Fan, Ying & Liu, Yu, 2020. "Achieving grid parity of solar PV power in China- The role of Tradable Green Certificate," Energy Policy, Elsevier, vol. 144(C).
    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. Na, Chunning & Wang, Jing & Feng, Bin & Pan, Huan, 2024. "Impact analysis of the four-party evolutionary game in renewable portfolio standard under dynamic parameters," Renewable Energy, Elsevier, vol. 237(PB).

    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. Zeng, Lijun & Du, Wenjing & Zhao, Laijun & Zhan, Yanhong, 2023. "An inter-provincial transfer fee model under renewable portfolio standard policy," Energy, Elsevier, vol. 277(C).
    2. Li, Jialin & Hu, Yu & Chi, Yuanying & Liu, Dunnan & Yang, Shuxia & Gao, Zhiyuan & Chen, Yuetong, 2024. "Analysis on the synergy between markets of electricity, carbon, and tradable green certificates in China," Energy, Elsevier, vol. 302(C).
    3. Zeng, Lijun & Du, Wenjing & Zhao, Laijun & Chen, Shuai, 2024. "An inter-provincial coordinate model under Renewable Portfolio Standards policy based on tradable green certificate options trading," Renewable Energy, Elsevier, vol. 234(C).
    4. Hu, Yu & Chi, Yuanying & Zhao, Hao & Zhou, Wenbing, 2022. "The development of renewable energy industry under renewable portfolio standards: From the perspective of provincial resource differences," Energy Policy, Elsevier, vol. 170(C).
    5. Wu, Jiaqian & Zheng, Xiaolin & Yu, Songmin & Yu, Lean, 2024. "Modeling multi-market coupling effects considering the consumption above quota trading market in renewable portfolio standards: An agent-based perspective," Energy Economics, Elsevier, vol. 138(C).
    6. Xin-gang, Zhao & Lei, Xu & Ying, Zhou, 2022. "How to promote the effective implementation of China’s Renewable Portfolio Standards considering non-neutral technology?," Energy, Elsevier, vol. 238(PB).
    7. Ying, Zhou & Xin-gang, Zhao & Zhen, Wang, 2020. "Demand side incentive under renewable portfolio standards: A system dynamics analysis," Energy Policy, Elsevier, vol. 144(C).
    8. Yue, Tingyi & Wang, Honglei & Li, Chengjiang & Hu, Yu-jie, 2024. "Optimization strategies for green power and certificate trading in China considering seasonality: An evolutionary game-based system dynamics," Energy, Elsevier, vol. 311(C).
    9. Teng, Minmin & Lv, Kunfeng & Han, Chuanfeng & Liu, Pihui, 2023. "Trading behavior strategy of power plants and the grid under renewable portfolio standards in China: A tripartite evolutionary game analysis," Energy, Elsevier, vol. 284(C).
    10. Nguyen, Hieu T. & Felder, Frank A., 2020. "Generation expansion planning with renewable energy credit markets: A bilevel programming approach," Applied Energy, Elsevier, vol. 276(C).
    11. Tu, Qiang & Mo, Jianlei & Liu, Zhuoran & Gong, Chunxu & Fan, Ying, 2021. "Using green finance to counteract the adverse effects of COVID-19 pandemic on renewable energy investment-The case of offshore wind power in China," Energy Policy, Elsevier, vol. 158(C).
    12. Giest, Sarah & Mukherjee, Ishani, 2018. "Behavioral instruments in renewable energy and the role of big data: A policy perspective," Energy Policy, Elsevier, vol. 123(C), pages 360-366.
    13. Zeng, Lijun & Wang, Jiafeng & Zhao, Laijun, 2022. "An inter-provincial tradable green certificate futures trading model under renewable portfolio standard policy," Energy, Elsevier, vol. 257(C).
    14. Wang, Yu & He, Jijiang & Chen, Wenying, 2021. "Distributed solar photovoltaic development potential and a roadmap at the city level in China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 141(C).
    15. Samper, M. & Coria, G. & Facchini, M., 2021. "Grid parity analysis of distributed PV generation considering tariff policies in Argentina," Energy Policy, Elsevier, vol. 157(C).
    16. Yuanyuan He & Luxin Wan & Manli Zhang & Huijuan Zhao, 2022. "Regional Renewable Energy Installation Optimization Strategies with Renewable Portfolio Standards in China," Sustainability, MDPI, vol. 14(17), pages 1-18, August.
    17. Xu, Jie & Lv, Tao & Hou, Xiaoran & Deng, Xu & Liu, Feng, 2021. "Provincial allocation of renewable portfolio standard in China based on efficiency and fairness principles," Renewable Energy, Elsevier, vol. 179(C), pages 1233-1245.
    18. Javad Khazaei & Michael Coulon & Warren B. Powell, 2017. "ADAPT: A Price-Stabilizing Compliance Policy for Renewable Energy Certificates: The Case of SREC Markets," Operations Research, INFORMS, vol. 65(6), pages 1429-1445, December.
    19. Wang, Yunfei & Li, Jinke & O'Leary, Nigel & Shao, Jing, 2024. "Excess demand or excess supply? A comparison of renewable energy certificate markets in the United Kingdom and Australia," Utilities Policy, Elsevier, vol. 86(C).
    20. Ying, Zhou & Xin-gang, Zhao & Lei, Xu, 2022. "Supply side incentive under the Renewable Portfolio Standards: A perspective of China," Renewable Energy, Elsevier, vol. 193(C), pages 505-518.

    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:gam:jeners:v:16:y:2023:i:8:p:3517-:d:1126556. 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: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    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.