Abstract

The aim of the article is to develop the theoretical foundations of mechanism based on tradable green certificates system to stimulate development of domestic renewable energy sector. Study results. Literature review of the market tradable green certificates system is carried out. The current state of renewable energy development and shortcomings of feed-in tariff in Ukraine are analyzed. The paper justifies the need of the implementation of mandatory quotas for electricity consumption from renewable energy resources, system of issuance and circulation of green certificates at the national level to promote renewable energy deployment. Theoretical foundations of the tradable green certificates system for Ukrainian electricity market are proposed. The paper describes peculiarities of price formation for electricity from renewable energy resources and green certificate in order to ensure the same conditions for different renewable energy technologies development. Organizational stages of the tradable green certificates system for its implementation in Ukraine are developed, which include: accreditation of renewable energy plants; the establishing of annual quota quotas for green electricity consumption; determination of  the economic entities, who will be obliged to consume electricity from renewable energy resources and to purchase green certificates; creation of register and participants’ accounts of the tradable green certificates system; rules of purchase and selling of green certificates, fine formation under the tradable green certificates system etc. The combination of the sale of electricity from renewable energy sources by feed-in tariffs with the tradable green certificates system is proposed. The wholesale and retail electricity markets functioning scheme with combination of electricity selling by feed-in tariff and the tradable green certificates system is given. The article describes the positive effects from the tradable green certificates system introduction at the national level. In particular it will let to provide a stable demand for electricity from renewable energy sources; to form a system of reliable monitoring of generation and consumption of green electricity, which will increase the reliability of statistical information regarding indicators of renewable energy development; to create a competitive environment for economic entities, which are obliged to purchase green certificates; to create the precondition for usage of green certificates in additional mechanisms to stimulate renewable energy development outside the main tradable green certificates system. Conclusions and directions of further researches.  The tradable green certificates system is a new support scheme for Ukraine, which is more difficult to implement than feed-in tariff. However, with careful assessment of criteria, which underlie in the basis of its pricing and competitive environment formation, tradable green certificates system may be a more effective economic lever that will be able to provide dynamic development of the domestic renewable energy sector. Results of the study are the basis for the development of methodological approaches for evaluation of electricity generation cost from renewable energy resources under tradable green certificates and optimal level of annually mandatory quota for electricity consumption from renewable energy resources in order to minimize the financial burden on electricity consumers.

Keywords: renewable energy, tradable green certificates system, feed-in tariff, economic mechanisms

JEL Classification: Q28, Q41, Q42.

Cite as: Kurbatova, T.O. (2017). Theoretical foundations of tradable green certificates system formation in Ukraine. Marketing and Management of Innovations, 4, 374-383. https://doi.org/10.21272/mmi.2017.4-34

This work is licensed under a Creative Commons Attribution 4.0 International License

References

1. European Commission (2017). Share of renewables in energy consumption in the EU still on the rise to almost 17% in 2015. ec.europa.eu. Retrieved from http://ec.europa.eu/eurostat/web/energy/data/shares.
2. Abdmouleh,  Z., Alammari, R., &  Gastli, A. (2016). A. Review of policies encouraging renewable energy integration & best practices. Renewable and Sustainable Energy Reviews, 45, 249–262.
3. Schallenberg-Rodriguez, J., & Haas, R. (2012). Fixed feed-in tariff versus premium: A review of the current Spanish system. Renewable and Sustainable Energy Reviews, 16, 1, 293-305.
4. Kilinc-Ata, N. (2016).The evaluation of renewable energy policies across EU countries and US states: An econometric approach.Energy for Sustainable Development,  31,  83–90.
5. Haas, R.,  Resch, G., Ragwitz, M. et al. (2011). A historical review of promotion strategies for electricity from renewable energy sources in EU countries. Renewable and Sustainable Energy Reviews, 15 ,2, 1003–1034.
6. Krogh Boomsma, T., Meade, N., & Fleten, S. (2012).  Renewable energy investments under different support schemes: A real options approach. European Journal of Operational Research, 220, 1, 225-237.
7. Wolfgang, O., Jaehnert, S., & Mo, B. (2012). Methodology for forecasting in the Swedish–Norwegian market for el-certificates. Energy, 88,  322-333.
8. Hanne, S. (2010). A Green Certificate Market in Norway and its implications for the market participants. Energy Economics and Policy Term Paper, Spring, ETH, Zurich.
9. Darmani, A., Rickne, A., & Hidalgo, A.  et al. (2016). When outcomes are the reflection of the analysis criteria: A review of the tradable green certificate assessments. Renewable and Sustainable Energy Reviews, 62, 1255–127.
10. Fagiani, R., & Hakvoort, R. (2014). The role of regulatory uncertainty in certificate markets: A case study of the Swedish/Norwegian market. Energy Policy, 11, 608–618. 
11. REN21 (2015). Renewables. Global Status Report 2015. ren21.net. Retrieved from http://www.ren21.net/wp-content/uploads/2015/07/REN12-Onlinebook_SR2015_low1.pdf.
12. Kurbatova, T.O. (2015). Ekonomichni mekhanizmy stymuliuvannia rozvytku vidnovliuvalnoi enerhetyky v Yevropeiskomu Soiuzi [Economic mechanisms for renewable energy stimulation in the European Union]. Mekhanizm rehuliuvannia ekonomiky – Mechanism of Economic Regulation, 4, 66, 139 – 148 [in Ukrainian].
13. Schaeffer, G.J., Boots, M.G., Martens, J.W., & et al. (1999). Tradable green certificates. A new market-based incentive scheme for renewable energy: introduction and analysis. Netherlands Energy Research Foundatio, 39.
14. Nilsson, M., & Sundqvist, T. (2007). Using the market at a cost: How the introduction of green certificates in Sweden led to market inefficiencies. Utilities Policy, 15, 1, 49–59.
15. Holt, E., & Bird, L. (2005). Emerging Markets for Renewable Energy Certificates: Opportunities and Challenges. nrel.gov. Retrieved from http://www.nrel.gov/docs/fy05osti/37388.pdf.
16. O’Shaughnessy, E., Chang, L., & Heete, J. (2015). Status and Trends in the U.S. Voluntary Green Power Market. National Renewable Energy Laboratory. nrel.gov. Retrieved from http://www.nrel.gov/analysis/green-power.html.
17. Odgaard, O. (2000). The green electrcity market in Denmark: quotas, certificates and international trade. Proceedings of the colloquium “Quelle Politique pour l’Organisation du Marche del Electricite Renouvelable en Wallonie” (Copenhagen, 11–13 April 2000, pp. 1–9).
18. Niels, I. (2003). European schemes for promoting renewables in liberalized markets. Energy Policy, 31,. 665–676.
19. Kurbatova, T.O. (2016).  Metodychni pidkhody do otsiniuvannia vartosti elektroenerhii z vidnovliuvalnykh dzherel enerhii [Methodological approaches to the assessment of electricity cost from renewable energy sources]. Mekhanizm rehuliuvannia ekonomiky – Mechanism of Economic Regulation, 1, 104–113 [in Ukrainian].
20. Abolhosseini, S., & Heshmati, A. (2014).The main support mechanisms to finance renewable energy development. Renewable and Sustainable Energy Reviews, 40, 876–885. 
21. Pro poriadok vyznachennia klasiv spozhyvachiv: postanova Natsionalnoi komisii, shcho zdiisniuie derzhavne rehuliuvannia u sferakh enerhetyky ta komunalnykh posluh № 1052 vid 13.08.1998 r. [On the procedure for consumers classes determining: Resolution of the National Commission for state regulation in the energy and utilities № 1052, 13.08.1998] (n.d.). nerc.gov.ua. Retrieved from http://www2.nerc.gov.ua/control/uk/publish/article?showHidden=1&art_id=100925&cat_id=34446  [in Ukrainian].
22. Naskilky ta koly zrostatymut komunalni taryfy u 2016-2017 rokakh. [How much and when will utility rates increase in 2016-2017] (n.d.). tsn.ua. Retrieved from https://tsn.ua/groshi/naskilki-ta-koli-zrostatimut-komunalni-tarifi-u-2016-2017-rokah-563479.html [in Ukrainian].