The Impact of Carbon Trading Market on the Layout Decision of Renewable Energy Investment—Theoretical Modeling and Case Study

Ning Yan, Shenhai Huang, Yan Chen, Daini Zhang, Qin Xu, Xiangyi Yang and Shiyan Wen ()
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Ning Yan: Jiaxing Hengchuang Electric Power Design & Institute Co., Ltd., Jiaxing 314100, China
Shenhai Huang: Jiaxing Hengchuang Electric Power Design & Institute Co., Ltd., Jiaxing 314100, China
Yan Chen: Jiaxing Hengchuang Electric Power Design & Institute Co., Ltd., Jiaxing 314100, China
Daini Zhang: Jiaxing Hengchuang Electric Power Design & Institute Co., Ltd., Jiaxing 314100, China
Qin Xu: School of Economics and Finance, Xi’an Jiaotong University, Xi’an 710049, China
Xiangyi Yang: School of Economics and Finance, Xi’an Jiaotong University, Xi’an 710049, China
Shiyan Wen: School of Economics, Xi’an University of Finance and Economics, Xi’an 710003, China

Energies, 2025, vol. 18, issue 15, 1-30

Abstract: The Carbon Emissions Trading System (ETS) serves as a market-based mechanism to drive renewable energy (RE) investments, yet its heterogeneous impacts on different stakeholders remain underexplored. This paper treats the carbon market as an exogenous shock and develops a multi-agent equilibrium model incorporating carbon pricing, encompassing power generation enterprises, power transmission enterprises, power consumers, and the government, to analyze how carbon prices reshape RE investment layouts under dual-carbon goals. Using panel data from Zhejiang Province (2017–2022), a high-energy-consumption region with 25% net electricity imports, we simulate heterogeneous responses of agents to carbon price fluctuations (CNY 50–250/ton). The results show that RE on-grid electricity increases (+0.55% to +2.89%), while thermal power declines (–4.98% to −15.39%) on the generation side. Transmission-side RE sales rise (+3.25% to +9.74%), though total electricity sales decrease (−0.49% to −2.22%). On the consumption side, RE self-generation grows (+2.12% to +5.93%), yet higher carbon prices reduce overall utility (−0.44% to −2.05%). Furthermore, external electricity integration (peaking at 28.5% of sales in 2020) alleviates provincial entities’ carbon cost pressure under high carbon prices. This study offers systematic insights for renewable energy investment decisions and policy optimization.

Keywords: carbon price; carbon trading market; investment entities; renewable energy generation; renewable energy investment (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: 2025
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