Research On Renewable Energy Investment Strategy Under Cap-and-trade Mechanisms

Renewable energy investment has become the focus of global attention.Energy crisis and greenhouse effect are the factors restricting human development,and carbon dioxide is the main cause of greenhouse effect.On the one hand,investment in renewable energy can alleviate the electricity shortage;on the other hand,it can alleviate the problem of carbon emission increment.However,renewable energy has a high cost and intermittent characteristics,which leads to the lack of investment willingness of electricity generation enterprise(generator enterprise).Therefore,governments are needed to guide the investment behavior of electricity enterprises.A cap-and-trade mechanism is an effective way to encourage generator enterprises to invest in renewable energy,which has two forms: one is grandfather mechanism based on the total carbon quotas,another one is a benchmark mechanism based on unit carbon quota.Chinese and European governments have implemented both two mechanisms.This dissertation respectively considers the case that generator enterprise generates and sells electricity(generation and sale integration),such as Shandong;the case that generator enterprise generates electricity while electricity retailer enterprise(retailer enterprise)sells electricity(generation and sale separation),such as Sichuan.In the case of generation and sale integration,this dissertation study the impact of monopoly and competition market type on renewable energy investment;in the case of generation and sale separation,this dissertation discuss who implemented the cap-and-trade mechanism and who invests in renewable energy.First,comparing the impact of grandfather mechanism and benchmark mechanism on the renewable energy investment with a generator enterprise in the monopoly market.The researcher constructs the profit maximization model of generator enterprise and then compares the optimal solution of grandfather mechanism and benchmark mechanism.The main results are as follows:(1)The implementation of cap-and-trade mechanism can encourage generator enterprise to invest more in renewable energy;benchmark mechanism can encourage generator enterprise to invest more in renewable energy and produces more carbon emissions than these under grandfather mechanism.(2)Benchmark mechanism can reduce carbon emissions and ensure that electricity demand will not reduce.(3)Implementing an appropriate cap-and-trade mechanism can make generator enterprise obtain higher profits.Second,discussing that who should implement cap-and-trade mechanism,i.e.,whether cap-and-trade mechanism should be used for generator enterprise or retailer enterprise.A two-level electricity supply chain composed of a generator enterprise and retailer enterprise is constructed.Based on the optimal solution,the main results are shown as followed:(1)Compared with the retailer enterprise with the cap-and-trade mechanism,the implementation of a cap-and-trade mechanism for generator enterprise is more conducive to renewable energy investment.Furthermore,compared with the grandfather mechanism,the benchmark mechanism is more conducive to renewable energy investment.Therefore,the generator enterprises adopted the benchmark mechanism is most effective for renewable energy investment.(2)When the cap-andtrade mechanism is adopted for generator enterprise,the investment in renewable energy increases with the unit carbon emission;When the cap-and-trade mechanism is adopted for retailer enterprise,the investment in renewable energy decreases with unit carbon emission.Third,this dissertation discuss who should invest in renewable energy,i.e.,whether renewable energy should be invested by generator enterprise or retailer enterprise.A twolevel electricity supply chain composed of a generator enterprise and retailer enterprise is constructed.Based on the optimal solution,the main results are shown as follows:(1)When the electricity generator invests in renewable energy,the profit of the electricity seller is lower than that of the electricity generator;when the electricity seller invests in renewable energy,the profit of the electricity seller is higher than that of the electricity generator.(2)Compared with the electricity generator invests in renewable energy,there will be more investment,higher electricity price,more electricity demand,and higher profits of supply chain enterprises under the electricity seller investment.(3)The increase of the investment cost coefficient reduces the investment,electricity price,and electricity demand,which leads to a decrease in the profits of electricity supply chain enterprises.Finally,comparing the impact of grandfather mechanism and benchmark mechanism on the renewable energy investment with two generator enterprises.The profit maximization models of two generator enterprises are constructed when they compete with each othe.Based on the optimal solution,the main results are shown as follows:(1)The implementation of cap-and-trade mechanism can encourage the generator enterprise to invest more in renewable energy;benchmark mechanism can encourage the generator enterprise to invest more in renewable energy and produces more carbon emissions than those under grandfather mechanism.(2)With the increase of unit carbon emission of one generator enterprise,the electricity demand and the total investment in renewable energy would increase,while the electricity demand of competitor would increase.(3)With the increase of carbon price,the profit under the grandfather mechanism would decrease,while the profit under the benchmark mechanism would first decrease and then increase.This dissertation's main contributions are as follows:(1)For the issue of renewable energy investment in the primary stage of carbon regulation,this dissertation creatively answers that the benchmark mechanism is more favorable to renewable energy investment than grandfather mechanismy.(2)For the issue who will implement carbon regulation policy and who will invest in renewable energy,this dissertation finds that regulation of electricity generator is more conducive to renewable energy investment,and retailer is more conductive to renewable energy investment.