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

Yanbin Xu, Jiaxin Ma, Yuqing Wang and Ming Zeng ()
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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

Energies, 2023, vol. 16, issue 8, 1-29

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.

Keywords: renewable-energy policy; tradable green certificates; renewable portfolio standard; reflexivity; decision-making; sustainable development (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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