CoulonKhazaeiPowell_Feb2015.pdf (509.86 kB)
SMART-SREC: a stochastic model of the New Jersey solar renewable energy certificate market
journal contribution
posted on 2023-06-08, 20:41 authored by Michael Coulon, Javad Khazaei, Warren PowellMarkets for solar renewable energy certificates (SRECs) are gaining in promi- nence in many states, stimulating growth of the U.S. solar industry. However, SREC market prices have been extremely volatile, causing high risk to participants and potentially less investment in solar power generation. Such concerns necessitate the development of realis- tic, flexible and tractable models of SREC prices that capture the behavior of participants given the rules that govern the market. We propose an original stochastic model called SMART-SREC to fill this role, building on established ideas from the carbon pricing liter- ature, and including a feedback mechanism for generation response to prices. We calibrate the model to the New Jersey market and backtest it, analyzing parameter sensitivity and demonstrating its ability to reproduce historical dynamics. Finally, we run simulations to investigate the role and impact of regulatory parameters, thus providing insight into the crucial role played by market design.
History
Publication status
- Published
File Version
- Accepted version
Journal
Journal of Environmental Economics and ManagementISSN
0095-0696Publisher
ElsevierExternal DOI
Volume
73Page range
13-31Department affiliated with
- Business and Management Publications
Full text available
- Yes
Peer reviewed?
- Yes
Legacy Posted Date
2015-05-20First Open Access (FOA) Date
2017-03-16First Compliant Deposit (FCD) Date
2015-05-06Usage metrics
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