Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/210413
Authors: 
Kim, Hyunseok
Year of Publication: 
2019
Citation: 
[Journal:] KDI Journal of Economic Policy [ISSN:] 2586-4130 [Volume:] 41 [Year:] 2019 [Issue:] 4 [Pages:] 67-99
Abstract: 
This paper, focusing on the renewable portfolio standard (RPS), evaluates alternative renewable energy policies. We propose a tractable equilibrium model which provides a structural representation of Korea’s electricity market, including its energy settlement system and renewable energy certificate (REC) transactions. Arbitrage conditions are used to define the core value of REC prices to identify relevant competitive equilibrium conditions. The model considers R&D investments and learning effects that may affect the development of renewable energy technologies. The model is parameterized to represent the baseline scenario under the currently scheduled RPS reinforcement for a 20% share of renewable generation, and then simulated for alternative scenarios. The result shows that the reinforcement of the RPS leads to higher welfare compared to weakening it as well as repealing it, though there remains room to enhance welfare. It turns out that subsidies are welfare-inferior to the RPS due to financial burdens and that reducing nuclear power generation from the baseline yields lower welfare by worsening environmental externalities.
Subjects: 
Electricity Market
Renewable Portfolio Standard
Technology
Renewable Energy Certificate
Welfare
JEL: 
Q21
Q28
Q31
Persistent Identifier of the first edition: 
Creative Commons License: 
https://creativecommons.org/licenses/by-sa/4.0/
Document Type: 
Article

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