Abstract
A stable income flow from renewable energy certificate (REC) sales is crucial for renewable energy companies. This study examines the relationship between REC price uncertainty and renewable energy investment. Using Korean REC market data, this study finds that a high level of uncertainty regarding REC prices discourages renewable energy investment. Given that the decision to invest in renewable projects is irreversible, it is optimal to postpone new renewable energy installations until REC price uncertainty is resolved. In the solar photovoltaic context, solar project developers reduce investment in power capacity significantly in periods when REC prices are volatile and increase investment when prices are stable. Moreover, small and medium-sized renewable energy plants are more sensitive to REC price uncertainty than are large renewable plants. This study suggests that promoting renewable energy requires a well-functioning REC market that provides stable REC prices.
Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
