IDEAS home Printed from https://ideas.repec.org/p/hal/journl/hal-02264847.html
   My bibliography  Save this paper

Analyzing the Dynamic Impact of Electricity Futures on Revenue and Risk of Renewable Energy in China

Author

Listed:
  • Yue Zhang

    (China University of Petroleum)

  • Arash Farnoosh

    (IFPEN - IFP Energies nouvelles)

Abstract

Though the electricity market in China has gone through several reforms in the last few decades, the market is still not completely liberalized. The wholesale prices are regulated and for renewable it is based on feed-in tariff; there is not yet a competitive spot or derivative market concerning the generation side. Furthermore, with great potential, renewable energy is being gradually promoted by the government to compete freely with conventional energies. However, it is hard for a renewable generator to survive without subsidy. So, in this paper we propose a new round of revolution in power sector to introduce electricity futures into China with the expectation of perfecting the market and providing a proper hedging tool for renewable plants. We make an estimation of the risk premium and then simulate the futures prices in China's market. To support the establishment of the futures contracts, we also propose two pricing mechanisms: Demand-side price & Opportunity cost price and study their effects on the futures. Finally, some suggestions with regard to the construction of futures market in China and the operational strategy for renewable plants are given.

Suggested Citation

  • Yue Zhang & Arash Farnoosh, 2019. "Analyzing the Dynamic Impact of Electricity Futures on Revenue and Risk of Renewable Energy in China," Post-Print hal-02264847, HAL.
  • Handle: RePEc:hal:journl:hal-02264847
    DOI: 10.1016/j.enpol.2019.06.011
    Note: View the original document on HAL open archive server: https://ifp.hal.science/hal-02264847
    as

    Download full text from publisher

    File URL: https://ifp.hal.science/hal-02264847/document
    Download Restriction: no

    File URL: https://libkey.io/10.1016/j.enpol.2019.06.011?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
    ---><---

    Citations

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


    Cited by:

    1. Li, Yi & Liu, Tianya & Xu, Jinpeng, 2023. "Analyzing the economic, social, and technological determinants of renewable and nonrenewable electricity production in China: Findings from time series models," Energy, Elsevier, vol. 282(C).
    2. Li, Yanxue & Zhang, Xiaoyi & Gao, Weijun & Ruan, Yingjun, 2020. "Capacity credit and market value analysis of photovoltaic integration considering grid flexibility requirements," Renewable Energy, Elsevier, vol. 159(C), pages 908-919.
    3. Deqin Lin & Wenyang Deng & Siting Dai, 2022. "A Margin Design Method Based on the SPAN in Electricity Futures Market Considering the Risk of Power Factor," Energies, MDPI, vol. 15(14), pages 1-14, July.
    4. Zhang, Lihong & Wang, Jun & Wang, Bin, 2020. "Energy market prediction with novel long short-term memory network: Case study of energy futures index volatility," Energy, Elsevier, vol. 211(C).
    5. Wang, Kai-Hua & Su, Chi-Wei & Lobonţ, Oana-Ramona & Moldovan, Nicoleta-Claudia, 2020. "Chinese renewable energy industries’ boom and recession: Evidence from bubble detection procedure," Energy Policy, Elsevier, vol. 138(C).

    More about this item

    Keywords

    Spot Prices; Electricity Market; Futures Prices; Hedging Strategy;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    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:hal:journl:hal-02264847. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    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.