Promotion of Market Access for Renewable Energy in the Nordic Power Markets

38 Pages Posted: 22 Dec 2010 Last revised: 5 Nov 2014

See all articles by Maria Kopsakangas-Savolainen

Maria Kopsakangas-Savolainen

Finnish Environment Institute; University of Oulu - Department of Economics, Accounting and Finance

Rauli Svento

University of Oulu - Department of Economics, Accounting and Finance

Date Written: June 8, 2011

Abstract

Emissions trading systems for non-renewable and Feed-In Tariffs for renewable energy sources are currently widely in use. This study investigates how renewable targets for the Nordic power market might be achieved at the lowest possible costs. The instruments investigated are Feed-In Tariffs (two varieties), shadow-prices for CO2 emissions, (through Emission Trading Scheme (ETS)), increased penetration of Real-Time Pricing into electricity markets and an increased price-elasticity of demand for electric power. We use a simulation model of the Nordic Power market to reach the results. Our simulations show that even with strong assumptions concerning Real-Time Pricing combined with current emissions trading system no wind power emerges in the market without Feed-In Tariffs. Our results show that from the studied instruments the most cost efficient way to reach the targets of wind energy market shares is the economically sound opportunity cost based Feed-In Tariff. We show that this tariff is at the same time the most cost efficient way to reduce carbon dioxide emissions.

Keywords: Feed-in Tariff, Real-Time Pricing, Renewable Energy

JEL Classification: D24, D50, L11, Q28, Q41, Q52, Q53

Suggested Citation

Kopsakangas-Savolainen, Maria and Svento, Rauli, Promotion of Market Access for Renewable Energy in the Nordic Power Markets (June 8, 2011). Available at SSRN: https://ssrn.com/abstract=1729723 or http://dx.doi.org/10.2139/ssrn.1729723

Maria Kopsakangas-Savolainen (Contact Author)

Finnish Environment Institute ( email )

PO Box 413
Oulu, 90014
Finland

University of Oulu - Department of Economics, Accounting and Finance ( email )

PO Box 4600
FIN-90014 University of Oulu
Finland

Rauli Svento

University of Oulu - Department of Economics, Accounting and Finance ( email )

PO Box 4600
FIN-90014 University of Oulu
Finland

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