Asset characteristics of solar renewable energy certificates: market solution to encourage environmental sustainability

Richard A. Michelfelder

Journal of Sustainable Finance & Investment, 2014, vol. 4, issue 3, 280-296

Abstract: The solar renewable energy certificate (SREC) or green certificate outside the USA is a renewable electricity production subsidy and an environmental financial asset created by governments' policy-makers. They are meant to be a Pigouvian market-based solution to monetize social externalities in electricity use and production investment decisions. The asset pricing characteristics of the SREC market is compared with other traditional financial assets to understand the market for environmental assets. Traders of SRECs are the creators of SRECs, the owners or developers of photovoltaic projects that sell SRECs, or buyers, electric utilities that need SRECs to meet their renewable portfolio standard requirements. This creates a thin market and potential problems for efficient price discovery, liquidity and market manipulation. The contribution of this investigation is to increase the understanding of the asset characteristics of SRECs and potentially lead to a more liquid and efficient market and a more socially beneficial allocation of capital to solar electricity production.

Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://hdl.handle.net/10.1080/20430795.2014.946463 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:jsustf:v:4:y:2014:i:3:p:280-296

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/TSFI20

DOI: 10.1080/20430795.2014.946463

Access Statistics for this article

Journal of Sustainable Finance & Investment is currently edited by Dr Matthew Haigh

More articles in Journal of Sustainable Finance & Investment from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().