The development of a green certificate market

Liberalizing the electricity industry and attempting to reduce the emissions of greenhouse gases are the two dominant trends in European energy policy. The last-mentioned issue might require the contribution from renewable energy technologies, but at present most renewables cannot compete on their own with conventional technologies. Thus, it can be expected that if renewables must compete solely on market conditions alone this will slow down or even halt the development of new renewable capacity. One model in which additional payments to renewable technologies are generated is based on the development of a separate green market. In Holland a voluntary green certificate market has existed since the beginning of 1998. In Denmark a comprehensive restructuring of the legislation for the electric power industry has just been completed, including the framework for developing a separate green market for renewable electricity production. The main objectives of introducing this type of electricity market in Denmark is to secure the development of renewable energy technologies (including contributions to greenhouse gas reductions), while at the same time releasing the Government from the (by now) quite heavy burden of subsidising renewable technologies. Finally, a green market will make it possible for these renewable technologies to be partly economically compensated for the environmental benefits, which they generate compared to conventional power production. With the recent Danish legislation as starting point this paper analyzes possible ways to set up a green certificate market, treating as well some of the consequences produced when the market is actually funtioning. The analysis is applicable for all renewable technologies, but special attention is given to wind power.     

Electricity generation from renewable energy sources in Poland

AbstractFor the European Union's Member States 2001/77/EC Directive on the promotion of electricity produced from renewable energy sources in the internal electricity market determined targets for 2010 of 21% share of electricity from renewable energy sources in total electricity consumption. Particular Member States adopted different measures for development of renewable and in consequence they achieved different results. Poland, being Member State of the EU since 2004 has accepted target of 7.5% for electricity generated from renewable energy sources until 2010. Currently, in this decade, new 2009/28/EC Directive on the promotion of the use of energy from renewable sources plays significant role in development of renewable energy sources. Directive set new target for 2020. Nowadays is a time for summary and assessment of results fulfilling Directives and monitor progress of new targets. Article presents measures implemented for renewable source energy development, also current state and perspectives of using of renewable energy sources in Poland and in the EU.     

On the efficient market diffusion of intermittent renewable energies

Capacity costs of renewable energies have been decreasing dramatically and are expected to fall further, making them more competitive with fossils. Building on an analytically tractable peak-load pricing model, we analyze how intermittency of renewable energies affects the market diffusion that results from these lower costs. In particular, once renewables have become competitive by attaining the same levelized cost of electricity (LCOE) as fossils, the marginal increase in efficient capacities due to a further cost reduction varies substantially. Initially it is small, then it rises, but it falls again once renewable capacities are large enough to satisfy the whole electricity demand at times of high availability. If external costs of fossils are internalized by a Pigouvian tax, then perfect competition leads to efficient investments in renewable and fossil capacities; even though we assume that only a subgroup of consumers can adapt their demand to price fluctuations that are caused by the intermittency of renewables. Moreover, fossils receive a capacity payment through the market for their reliability in serving demand of non-reactive consumers. Maximum electricity prices rise with the share of renewables. If regulators impose a price cap, this initially raises investments in renewables, but the effect may reverse if the share of renewables is large.     

Spanish energy roadmap to 2020: Socioeconomic implications of renewable targets

The European Union has established challenging targets for the share of renewable energies to be achieved by 2020; for Spain, 20% of the final energy consumption must be from renewable sources at such time. The aim of this paper is the analysis of the consequences for the electricity sector (in terms of excess cost of electricity, investment requirements, land occupation, CO₂ emissions and overcapacity of conventional power) of several possibilities to comply with the desired targets. Scenarios are created from different hypotheses for energy demand, biofuel share in final energy in transport, contribution of renewables for heating and cooling, renewable electricity generation (generation mix, deployment rate, learning curves, land availability) and conventional power generation (lifetime of current installations, committed deployment, fossil fuel costs and CO₂ emissions cost). A key input in the estimations presented is the technical potential and the cost of electricity from renewable sources, which have been estimated in previous, detailed studies by the present authors using a methodology based on a GIS (Geographical Information System) and high resolution meteorological data. Depending on the scenario, the attainment of the targets will lead to an increase in the cost of electricity from 19% to 37% with respect to 2007.     

Consumers' willingness to pay for green electricity: A meta-analysis of the literature

At present, electricity generated from power plants using renewable sources costs more than electricity generated from power plants using conventional fuels. Consumers bear these expenses directly or indirectly through higher prices for renewable energy or taxes. The number of studies published over the last few years focusing on people's preferences for renewables has increased steadily, making it more and more difficult to identify key explanatory factors that determine people's willingness-to-pay (WTP) for renewables. We present results of a meta-regression on valuation of consumer preferences for a larger share of renewable energy in their electricity mix. Our meta-regression results reveal a number of important factors that explain the differences in WTP values for renewable energy. Different valuation methods show widely different values, with choice experiments producing the highest estimates. Our results further indicate that consumers' WTP for green electricity differs by source, with hydropower being the least valued. Variables that are often omitted from primary valuation studies are important in explaining differences in values. These variables describe individual and household characteristics as well as information on the type of power plant that will be replaced by renewables. Further, the marginal effect of a survey conducted in the US is pronounced. We also assess the potential for using the results for out-of-sample value transfer and find a median error of 21%.     

The Benefits of Renewables in Turkey

Renewable energy is proving to be commercially viable for a growing list of consumers and uses. Renewable energy technologies provide many benefits that go well beyond energy alone. More and more, renewable energies are contributing to the three pillars of sustainable development not only in IEA countries, but globally. Turkey is an energy-importing country; more than half of the energy requirement has been supplied by imports. Domestic oil and lignite reserves are limited and lignites are characterized by high ash, sulfur, and moisture content. In this regard, renewable energy resources appear to be one of the most efficient and effective solutions for sustainable energy development in Turkey. Turkey's geographical location has several advantages for the extensive use of most of these renewable energy sources. Because of this and the fact that it has limited fossil fuel resources, a gradual shift from fossil fuels to renewables seems to be serious and the sole alternative for Turkey. This article presents the role of the renewables in future directions in IEA countries with Turkey. At present the share of hydropower and biomass is high as 30% in the primary energy production of Turkey. In the case of solar, geothermal, and wind energy, there is an important potential for domestic heating and electricity generation.     

RE in EU-28: Renewable energy policies in an enlarged European Union

The goal of increasing the share of renewable energy sources (RES) in total primary energy supply (TPES) as well as in electricity production in an enlarged European Union (EU-28) will be a challenging one and most likely will be addressed by a mix of promotion instruments. Mischa Bechberger and Danyel Reiche take a look at the implications for renewables in an enlarged EU.The most prominent policies in the case of electricity are renewable energy feed-in tariffs (REFIT) and quota systems, but also others like tenders, energy tax exemptions, and environmental funds in the form of investment subsidies, and soft loans are playing a part.     

Econometric analysis of 15-minute intraday electricity prices

The trading activity in the German intraday electricity market has increased significantly over the last years. This is partially due to an increasing share of renewable energy, wind and photovoltaic, which requires power generators to balance out the forecasting errors in their production. We investigate the bidding behaviour in the intraday market by looking at both last prices and continuous bidding, in the context of a reduced-form econometric analysis. A unique data set of 15-minute intraday prices and intraday-updated forecasts of wind and photovoltaic has been employed. Price bids are explained by prior information on renewables forecasts and demand/supply market-specific exogenous variables. We show that intraday prices adjust asymmetrically to both forecasting errors in renewables and to the volume of trades dependent on the threshold variable demand quote, which reflects the expected demand covered by the planned traditional capacity in the day-ahead market. The location of the threshold can be used by market participants to adjust their bids accordingly, given the latest updates in the wind and photovoltaic forecasting errors and the forecasts of the control area balances.     

Green electricity policies in the United States: case study

While there has been interest in promoting the use of renewable energy in electricity production for a number of years in the United States, the market share of non-hydro renewable energy sources in electricity production has remained at about 2 percent over the past decade. The paper reviews the principal energy resources used for electricity production, considers the changing regulatory environment for the electricity industry, and describes government policies that have been used to promote green electricity in the United States, with an emphasis on measures adopted by state governments. Factors influencing the development of green power markets are also discussed, including underlying economic issues, public policy measures, the regulatory environment, external costs, and subsidies. Without significant increases in fossil fuel prices, much more stringent environmental regulations, or significant changes in electricity customer preferences, green electricity markets are likely to develop slowly in the United States.     

Nuclear and intermittent renewables: Two compatible supply options? The case of the French power mix

The complementary features of low-carbon power sources are a central issue in designing energy transition policies. The French current electricity mix is characterised by a high share of nuclear power which equalled 76% of the total electric production in 2015. With the increase in intermittent renewable sources, nuclear flexibility is examined as part of the solution to balance electricity supply and demand. Our proposed methodology involves designing scenarios with nuclear and intermittent renewable penetration levels, and developing residual load duration curves in each case. The load modulation impact on the nuclear production cost is estimated.This article shows to which extent the nuclear annual energy production will decrease with high shares of intermittent renewables (down to load factors of 40% for proactive assumptions). However, the production cost increase could be compensated by progressively replacing the plants. Moreover, incentives are necessary if nuclear is to compete with combined-cycle gas turbines as its alternative back-up option.In order to reconcile the social planner with plant operator goals, the solution could be to find new outlets rather than reducing nuclear load factors. Nuclear flexibility could then be considered in terms of using its power to produce heat or hydrogen.     

Analysis of renewable energy development to power generation in the United States

Renewable energy resources have historically played a small role for electricity generation in the US. However, concerns such as security of energy supply, limitations and price fluctuations of fossil fuels, and threats of climate changes have encouraged US policy makers to think and debate about diversification strategy in the energy supply and promotion of renewables. The current paper discusses the role of renewable portfolio in the US energy action plan during 2010–2030. A system dynamics model is constructed to evaluate different costs of renewable energy utilization by 2030. Results show that while renewables will create a market with near 10 billion $ worth (in the costs level) in 2030, the total value of renewable energy promotion and utilization in the US will be more than 170 billion $(in the costs level) during 2010–2030.     

Are government policies effective in promoting deployment of renewable electricity resources?

Using a panel data over 50 US states and years 1991–2007, this paper uses a state fixed-effects model with state-specific time-trends to estimate the effects of state policies on the penetration of various emerging renewable electricity sources, including wind, biomass, geothermal, and solar photovoltaic. Renewable portfolio standards with either capacity or sales requirements have a significant impact on the penetration of all types of renewables—however, this impact is variable depending on the type of renewable source: it is negative for combined renewables, wind, and biomass; and positive for geothermal and solar. Further, clean energy funds and required green power options mostly result in increasing the penetration of all types of renewables. On the other hand, voluntary renewable portfolio standards as well as state green power purchasing programs are found to be ineffective in increasing the penetration of any type of renewable source. Finally, economic variables, such as electricity price, natural gas price, and per capita GDP as well as structural variables, such as league of conservation voters rating and the share of coal-generated electricity are found to be generally insignificant, suggesting the crucial role of policy in increasing the penetration of renewables.     

Analysing the effectiveness of renewable energy supporting policies in the European Union

With several mid-term policies in place to support the development of renewables, the European Union (EU) seems on its way to increasing the share of renewable energy to the targeted 12% by the year 2010. It is however, yet unclear how effective these policies are, which technologies will see the largest growth and which countries will indeed be able to meet their targets. This article discusses a monitoring protocol that was developed to monitor this effectiveness and judge whether targets will be met. In a step-wise approach policy instruments are characterised and analysed, leading to a quantitative assessment of the likely growth in renewable energy production for each individual technology and country in case no policy changes occur. Applying this monitoring protocol at the EU-level we show that with the current policies in place renewable energy production will reach a share of 8–10% in 2010, and the share of electricity production will reach a level of 15–18% of total electricity consumption, whereas the target is 22.5%. Additional policies are clearly needed to achieve the ambitious targets set.     

Governmental policy and prospect in electricity production from renewables in Lithuania

In Lithuania, the generation of electricity is based on the nuclear energy and on the fossil fuels. After the decommissioning of Ignalina nuclear power plant in 2009, the Lithuanian Power Plant and other thermal plants will become the major sources of electricity. Consequently, the Lithuanian power sector must focus on the implementation of renewable energy projects, penetration of new technologies and on consideration of the future opportunities for renewables, and Government policy for promoting this kind of energy. Production of electricity from renewable energy is based on hydro, biomass and wind energy resources in Lithuania. Due to the typical climatic condition in Lithuania the solar photovoltaics and geothermal energy are not used for power sector. Moreover, the further development of hydropower plants is limited by environmental restrictions, therefore priority is given to wind energy development and installation of new biomass power plants. According to the requirements set out in the Directive 2001/77/EC of the European Parliament and of the Council of 27 September 2001 on the promotion of electricity produced from renewable energy sources in the internal electricity market [Official Journal L283, 33–40, 27 October 2001], 7% of gross consumption of electricity will be generated from renewable energy by 2010 in Lithuania. The aim of this paper is to show the estimation of the maximum renewable power penetration in the Lithuanian electricity sector and possible environmental impact.     

Alternative Electricity Generation Opportunities

Abstract

In this article, comparing four renewable energy sources shows 70% of the electricity generated by the four to come from geothermal with only 42% of the total installed capacity. Wind energy contributes 27% of the electricity, but has 52% of the installed capacity. Solar energy produces 2% of the electricity and tidal energy 1%. Biomass constitutes 93% of the total direct heat production from renewables, geothermal 5%, and solar heating 2%. Conventional fossil energy will not be enough to meet the continuously increasing need for energy in the future. In this case, renewable energy sources will become important. Alternative energy sources are increasing need for energy in the future.     

Renewable electricity in Sweden: an analysis of policy and regulations

This study aims to analyse the developments in renewable energy policy making in Sweden. It assesses the energy policy context, changes in the choice of policy instruments, and provides explanations behind policy successes and failures. Swedish renewable energy policy has been developing in a context of uncertainty around nuclear issues. While there has been made a political decision to replace nuclear power with renewables, there is a lack of consensus about the pace of phasing out nuclear power due to perceived negative impacts on industrial competitiveness. Such uncertainty had an effect in the formulation of renewable energy policy. Biomass and wind power are the main options for renewable electricity production. Throughout 1990s, the combined effect of different policy instruments has stimulated the growth of these two renewable sources. Yet, both biomass and wind power are still a minor contributor in the total electricity generation. Lack of strong government commitment due to uncertainty around nuclear issues is a crucial factor. Short-term subsidies have been preferred rather than open-ended subsidy mechanisms, causing intervals without subsidies and interruption to development. Other factors are such as lack of incentives from the major electricity companies and administrative obstacles. The taxation system has been successful in fostering an expansion of biomass for heating but hindered a similar development in the electricity sector. The quota system adopted in 2003 is expected to create high demand on biomass but does not favour wind power. The renewable energy aims are unlikely to be changed. Yet, the future development of renewable energy policies especially for high-cost technologies will again depend strongly on nuclear policies, which are still unstable and might affect the pace of renewable energy development.     

Fluctuating renewables in a long-term climate change mitigation strategy

Integrated Assessment models, widely applied in climate change mitigation research, show that renewable energy sources (RES) play an important role in the decarbonization of the electricity sector. However, the representation of relevant technologies in those models is highly stylized, thereby omitting important information about the variability of electricity demand and renewables supply. We present a power system model combining long time scales of climate change mitigation and power system investments with short-term fluctuations of RES. Investigating the influence of increasingly high temporal resolution on the optimal technology mix yields two major findings: the amount of flexible natural gas technologies for electricity generation rises while the share of wind energy only depends on climate policy constraints. Furthermore, overall power system costs increase as temporal resolution is refined in the model, while mitigation costs remain unaffected.     

Renewable energy sources in Turkey for climate change mitigation and energy sustainability

In Turkey, there is a much more potential for renewables, but represent about 37% of total energy production and 10% of total energy consumption. This share is not enough for the country and the governments should be increase to this situation. Renewable energy technologies of wind, biomass, hydropower, geothermal, solar thermal and photovoltaics are finally showing maturity and the ultimate promise of cost competitiveness. With respect to global environmental issues, Turkey's carbon dioxide emissions have grown along with its energy consumption. States have played a leading role in protecting the environment by reducing emissions of greenhouse gases. In this regard, renewable energy resources appear to be the one of the most efficient and effective solutions for clean and sustainable energy development in Turkey. Turkey's geographical location has several advantages for extensive use of most of these renewable energy sources. Certain policy interventions could have a dramatic impact on shaping the relationship between geological, geographic and climatic conditions and energy production. This study shows that there is enough renewable energy potential in Turkey for fuels and electricity. Especially hydropower and biomass are very well.     

Life cycle energy and environmental benefits of generating electricity from willow biomass

Biomass is a key renewable energy source expected to play an important role in US electricity production under stricter emission regulations and renewable portfolio standards. Willow energy crops are being developed in the northeast US as a fuel source for increasing biomass energy and bioproduct demands. A life cycle inventory is presented that characterizes the full cradle-to-grave energy and environmental performance of willow biomass-to-electricity. A willow biomass production model is developed using demonstration-scale field experience from New York. Scenarios are presented that mimic anticipated cofiring operations, including supplemental use of wood residues, at an existing coal-fired generating facility. At a cofiring rate of 10% biomass, the system net energy ratio (electricity delivered divided by total fossil fuel consumed) increases by 8.9% and net global warming potential decreases by 7–10%. Net SO₂ emissions are reduced by 9.5% and a significant reduction in NO_x emissions is expected. In addition, we estimate system performance of using willow biomass in dedicated biomass gasification and direct-fired generating facilities and demonstrate that the pollution avoided (relative to the current electricity grid) is comparable to other renewables such as PV and wind.     

Market power in renewable portfolio standards

Renewable portfolio standard (RPS), which requires a certain percentage of electricity production from renewables, has received considerable attention. One emerging issue is the possibility of strategic behavior in the renewable energy certificate/credit (REC) market, and its spillover effects on the electricity market. This paper develops dominant firm-competitive fringe models that account for market power. We show that market power could have significant impacts on the REC and power prices. In particular, when a nonrenewable generator is a dominant firm and a renewable generator is a competitive fringe, the nonrenewable firm has a strong incentive to lower the REC price, even to zero for avoiding REC costs. The zero REC price would negate price impacts in the power market, thereby mitigating market power of the dominant firm. However, this could lead to an underinvestment in renewables in the long run as subsidies received by renewables in form of RECs vanish. Therefore, regulatory agencies need to carefully oversee the market performance to ensure a healthy development of renewable industries under the RPS policies.