An inter-provincial tradable green certificate futures trading model under renewable portfolio standard policy. (15th October 2022)

• Record Type: Journal Article
• Authors: Zeng, Lijun; Wang, Jiafeng; Zhao, Laijun
• Is Part Of: Energy. Volume 257(2022)
• Publication Date: 2022-10-15
• Subjects: Renewable portfolio standard -- Tradable green certificate -- Futures trading -- Cooperative game -- Renewable energy generation; Power resources -- Periodicals; Power (Mechanics) -- Periodicals; Energy consumption -- Periodicals; 333.7905
• DOI: 10.1016/j.energy.2022.124772
• Languages: English
• ISSNs: 0360-5442

Abstract

Abstract: The geographically reverse distribution of renewable energy-rich regions and power load centers poses great challenges to the realization of Chinese renewable portfolio standard (RPS) targets, which has attracted academic attention. However, research on the inter-provincial management mechanisms of RPS is rare. To fill this gap, this study develops an inter-provincial tradable green certificate (TGC) futures trading model that combines TGC futures with inter-provincial TGC trading, which provides an efficient and cost-effective mechanism to achieve the RPS targets. In the model, we first construct an RPS target realization cost function, then divide provinces into buyers and sellers of TGC futures, then optimize the buyers' or sellers' renewable energy generation under the cooperation mode, and finally use the Shapley value method to distribute the cooperation benefits. An empirical study on five Chinese provinces showed that the inter-provincial TGC futures trading model can significantly reduce the RPS target realization cost by 3.291 billion CNY or by 4.52% and increase renewable energy generation by 414.29 × 10 8 kWh. Our sensitivity analysis of the TGC futures prices verifies the robustness of the model. Finally, our study proposes policy suggestions for the effective design of the TGC futures market and successful implementation of the RPS policy. Highlights: China's renewable energy-rich areas and load centers are inversely distributed. An inter-provincial tradable green certificate futures trading model is established. Inter-provincial cooperation and trade can optimize renewable energy distribution. The TGC futures trading model reduces the overall RPS target realization cost. The TGC futures trading model increases the renewable energy generation.