Contracts in electricity markets under EU ETS: A stochastic programming approach

The European Union Emission Trading Scheme (EU ETS) is a cornerstone of the EU's strategy to fight climate change and an important device for plummeting greenhouse gas (GHG) emissions in an economically efficient manner. The power industry has switched to an auction-based allocation system at t...

Celý popis

Uloženo v:
Podrobná bibliografie
Vydáno v:Energy economics Ročník 99; s. 105309
Hlavní autoři: Abate, Arega Getaneh, Riccardi, Rossana, Ruiz, Carlos
Médium: Journal Article
Jazyk:angličtina
Vydáno: Kidlington Elsevier B.V 01.07.2021
Elsevier Science Ltd
Témata:
Allocation
Allowances
Auctioning
Auctions
Climate change
CVaR
Deployment
Economics
Electric industries
Electricity
Emission trading
Emissions
Emissions allowance
Emissions control
Emissions trading
Energy economics
Equilibrium
Futures market
Generators
Greenhouse gases
Markets
Mathematical models
Optimization
Profits
Property
Risk
Risk aversion
Simplicity
Social welfare
Stochastic programming
Two-stage stochastic optimization
Uncertainty
Windfall profits
Risk aversion
Emission trading
Emissions allowance
CVaR
Two-stage stochastic optimization
ISSN:0140-9883, 1873-6181
On-line přístup:Získat plný text
Tagy: Přidat tag
Žádné tagy, Buďte první, kdo vytvoří štítek k tomuto záznamu!
Popis
Shrnutí:The European Union Emission Trading Scheme (EU ETS) is a cornerstone of the EU's strategy to fight climate change and an important device for plummeting greenhouse gas (GHG) emissions in an economically efficient manner. The power industry has switched to an auction-based allocation system at the onset of Phase III of the EU ETS to bring economic efficiency by negating windfall profits that have been resulted from grandfathered allocation of allowances in the previous phases. In this work, we analyze and simulate the interaction of oligopolistic generators in an electricity market with a game-theoretical framework where the electricity and the emissions markets interact in a two-stage electricity market. For analytical simplicity, we assume a single futures market where the electricity is committed at the futures price, and the emissions allowance is contracted in advance, prior to a spot market where the energy and allowances delivery takes place. Moreover, a coherent risk measure is applied (Conditional Value at Risk) to model both risk averse and risk neutral generators and a two-stage stochastic optimization setting is introduced to deal with the uncertainty of renewable capacity, demand, generation, and emission costs. The performance of the proposed equilibrium model and its main properties are examined through realistic numerical simulations. Our results show that renewable generators are surging and substituting conventional generators without compromising social welfare. Hence, both renewable deployment and emission allowance auctioning are effectively reducing GHG emissions and promoting low-carbon economic path. •A stochastic programming with financial contracts is used to model an electricity market with a generation mix.•RES and EUAs allowance trading effectively reduce GHG emissions and promote a low-carbon economic path.•RES penetration has a greater emission reduction impact than the CO2 price increase.•RES generators substitute conventional generators without compromising social welfare under contract designs.•RES penetration and CO2 price increase effectively contribute to emission reduction and climate change goals.
Bibliografie:ObjectType-Article-1
SourceType-Scholarly Journals-1
ObjectType-Feature-2
content type line 14
ISSN:0140-9883
1873-6181
DOI:10.1016/j.eneco.2021.105309