Research On The Financial Risk And Its Hedging Mechanism Of Renewable Energy Certificate Market

Renewable energy have gained a lot of attention and policy support worldwide since its cleanness and efficiency.Successful experience from developed countries have proven that the renewable portfolio standard and renewable energy certificate have powerful effect on the growth of renewable energy generation.Faced with the mandatory requirements of the country that non fossil energy accounts for up to 20% in 2020.REC market is to be a huge market of importance.However the financial risk of REC is too high to guarantee power plants' profit.Therefore,this study puts forward the spread trade of REC to prevent its financial risk.Based on the China REC trading market dynamic game-theoretic model,this paper calculates the quantity of financial risk of REC and analyzes the different effort of variable energy policies.This paper(1)reviews current foreign and national research situation of renewable energy,such as the current reform status and the application of game theory in the energy modeling(2)discusses the current policy situation of renewable energy power market in different countries,the dilemma of Chinese renewable energy generation(3)analyzes the financial risk of REC and avoiding method(4)illustrates the dynamic game model of China REC market based on the model assumptions(5)design three different scenarios to measure variable energy policy effort on the financial risk and the yield of power plants(6)do the sensitivity analysis.The research results show that banking and borrowing of renewable energy certificate could effectively improve the income of power plant and reduce the financial risk of REC.For policy makers,when the REC interest equals 8% more or less,the penalty is two times of REC equilibrium price,the annual growth rate of RPS is not higher than 2%,the financial risk of REC could be significantly reduced.At the end of the paper,we sum up that energy policy of the combination of RPS and REC with banking and borrowing can effectively reduce the financial risks of REC based on analyzing process and results,and at last we propose the future prospects.