Impacts of the Renewable Portfolio Standard on Regional Electricity Markets

This paper examines the effects of renewable portfolio standard (RPS) regulation on regional electricity markets. A regional market with one or two power suppliers with the capacity to generate renewable energy and access the tradable green certificate (TGC) market is considered. A monopoly model and a Nash game duopoly model to study the effects of TGC price and RPS percentage are established. Surprisingly, the analytical results indicate that the green power output decreases when the RPS percentage increases in a regional market. The analytical results also show that when the TGC price increases, the green power output increases and the total profit first decreases and then increases. Under both regional market structures, an optimal RPS percentage to maximize the social welfare exists. The difference between the two models is also compared with a numerical analysis. When the TGC price increases, the electricity outputs change more slowly in the duopoly market than in the monopoly market. The optimal RPS percentage to maximize the social welfare is higher in the duopoly market than in the monopoly market.