Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/92968
Authors: 
Unteutsch, Michaela
Year of Publication: 
2014
Series/Report no.: 
EWI Working Paper 14/01
Abstract: 
It has been shown that international cooperation in achieving renewable energy targets, e.g., via a common tradable green certificate market, increases overall welfare. However, cooperation in the support of electricity from renewable energy sources also leads to regional price effects, from which some groups benefit while others lose. On a regional level, the introduction of cross-border cooperation in RES-E support generally has an opposite effect on support expenditures and wholesale electricity prices, as long as grid congestion between the different regions exists. In this paper, a theoretical model is used to analyze under which conditions different groups benefit or suffer from the introduction of cooperation. Findings of the analysis include that effects on consumers and total producers per country can only be clearly determined if no grid congestions between the countries exist. If bottlenecks in the transmission system exist, the relationship between the slopes of the renewable and the non-renewable marginal generation cost curves for electricity generation as well as the level of the RES-E target essentially determine whether these groups benefit or lose from the introduction of green certificate trading. In contrast, system-wide welfare always increases once cooperation in RES-E support is introduced. Similarly, welfare on the country level always increases (compared to a situation without RES-E cooperation) if the countries are perfectly or not at all physically interconnected. In the case of congested interconnectors, each country always at least potentially benefits from the introduction of certificate trade, taking into account possible distributions of congestion rents between the countries.
Subjects: 
Cooperation Mechanisms
Tradable Green Certificates
Welfare
Consumer Rent
Producer Profit
JEL: 
Q40
F19
Q48
Q28
Document Type: 
Working Paper

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