Abstract
While Feed-in-Tariffs (FIT) promote the growth of renewable electricity, they also impose heavy financial burdens on the government, thus leading to a shift from FIT to the Renewable Portfolio Standard (RPS) mechanism with Tradable Green certificates (TGC). Examining the pricing of green certificates from the perspective of supply and demand is the key to understanding their price changes and the basis for analyzing whether they can substitute for subsidies. However, there are few studies on the pricing mechanism of green certificates. To understand the efficiency of green certificate substitution for government subsidies, we study the green certificates market in China as an example. Firstly, we examine the factors affecting the supply of and demand for green certificates under the co-existence of FIT and RPS and study the pricing mechanism of the green certificates. Then we establish the price model to forecast the price of green certificates in China. Finally, we calculate the substitution efficiency of green certificates for subsidies in China from 2023 to 2025. The results show that in 2025, the price of China's green certificates will not exceed 246.8 CNY per certificate, and the substitution efficiency of green certificates for subsidies will be 41.8 %.
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