Analysis of the Norwegian-Swedish Market for Green Certificates Using the EMPS Model
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- Institutt for elkraftteknikk 
Over the last few years it has been important for the European countries to support green energy as a countermeasure against climate changes. Norway and Sweden have chosen to implement a common green certificate market, which is a support scheme for renewable energy technology. The scheme will be a crucial contribution for Norway to abide by EUs' Renewables Directive. So far the market is doing really well and is on track to complete the goal of 26,4 TWh new electricity production from renewables before the end of 2020. The joint certificate market is very closely connected to the power market. Therefore, the EMPS model, which is a good model of the Nordic power market, was chosen as the model to use for testing and forecasting in this thesis. The main objective has been to analyze the Norwegian-Swedish certificate market in the EMPS model with particular focus on factors that affect the green certificate price levels and price fluctuations. This has been done by adjusting and updating a realistic dataset for the Nordic power market. The historic values from the real certificate market were used as inputs and as a basis for the simulations. 10 different cases have been presented and simulated, where the main differences between them were the expansion rate of new production and the expansion of different energy sources. The results obtained from the simulations corresponded to theoretical findings about the green certificate market. Currently the certificate storage holds 13 million certificates, but it appears like it might increase towards a value of 15 million during 2015, before it will start to decrease considerably from 2016. In order to achieve different price scenarios in the simulations, the initial certificate storage needed to be lowered a great deal from the real value, so that the EMPS model could see a possibility of deficit in the future. The most ideal cases with the most even price levels were achieved when the amount of production and consumption of green certificates were as close together as possible. It was demonstrated by the simulations that the expansion rate of new production greatly influences the certificate prices. If the expansion rate is fast, a smaller probability of deficit exists, and as a result the certificate prices will be lower. The opposite is true for a slow expansion rate. The different types of production sources (hydropower, wind power and biofuels) also affected the certificate price levels in different ways, even though the storage developments were the same. When there was more hydropower expansion the average price was the lowest, but the price curve was the most extreme. Expansion in wind power lead to a higher average price, while expansion in biofuels had the most even price curve. A reason for these different price scenarios could be that both hydropower and biofuels can be adjusted in response to power prices. However, different calibrations for the EMPS model had to be performed for the different cases. It is therefore likely that this also influenced the price levels for the different types of production. All things considered, it looks as if 2015 is going to be a very important year regarding the future of the common certificate market. A lot of decisions needs to be made regarding both changes in regulation and potential new investments, which will affect whether the common goal will be met or not. The future is uncertain, but with more work and testing the EMPS model could hopefully predict some of it.