Market for Tradeable Green Certiﬁcates
Ca Foscari University of Venice - Department of Economics
October 17, 2011
We propose an extended market for Green Certiﬁcates as an incentive scheme for investors and producers of electricity from Renewable Energy Sources. We derive the optimal buying and selling strategies of the agents in the market and the closed-form solution of the market clearing price by applying the Certainty Equivalence principle. The stochastic dynamic programming of the model is approximated numerically under iso-elastic demand function and the life history of the plan is simulated. We show that the mean and variance of prices depends on the rules set by the regulator at the beginning of the policy. The results indicate that when rational sellers follow their optimal strategy, the price ﬂuctuation is reduced compared to the ﬂuctuations of certiﬁcates’ ﬂow.
Number of Pages in PDF File: 23
Keywords: Tradeable Green Certiﬁcates, Numerical Methods, Stochastic Dynamic Programming
JEL Classification: Q28, C63working papers series
Date posted: June 8, 2012
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