Cross-provincial collaborative transaction that considers both the green electricity and the green certificate markets under a renewable portfolio standard policy

Abstract

In the current implementation of the Renewable Portfolio Standard (RPS), various quota entities are facing challenges, including high costs and limited flexibility within a non-collaborative, single green certificate market mechanism. To address these issues, we developed a cross-provincial collaborative transaction model that considers both the green electricity and the green certificate markets. It consists of five sub-models: a green electricity production net revenue maximization sub-model, a green electricity consumption net benefit maximization sub-model, a green electricity and green certificate market categorization sub-model, a cooperative game sub-model for green electricity and green certificate buyers and sellers, and a cooperative benefits allocation sub-model. The roles of each province (i.e., green electricity and certificate buyers and sellers), along with the optimal green electricity generation, green certificate trading volume, and cost of achieving RPS objectives for each province, can be determined by utilizing the first four sub-models. Ultimately, the cooperative benefit allocation sub-model promotes cooperation among the provinces. To validate the model's effectiveness, we chose five representative provincial-level regions of China for empirical analysis. We found that the cooperative mode decreased the cost by 238.554 × 108 CNY (15.9%) compared with each province independently achieving RPS targets in a non-cooperative mode. Moreover, cooperation increased green electricity generation by 447.94 × 108 kWh (13.3%). The cooperative mode will therefore encourage provincial governments to formulate cooperative strategies for achieving RPS objectives, ultimately reducing implementation costs and increasing flexibility and effectiveness.