Please use this identifier to cite or link to this item:
Appears in Collections:Economics Working Papers
Peer Review Status: Refereed
Title: Estimating the Price of ROCs
Authors: Bryan, Jeffrey
Lange, Ian
MacDonald, Alexander
Contact Email:
Citation: Bryan J, Lange I & MacDonald A (2013) Estimating the Price of ROCs. Stirling Economics Discussion Paper, 2013-08.
Keywords: Renewable Obligation
JEL Code(s): Q48
Issue Date: Jul-2013
Series/Report no.: Stirling Economics Discussion Paper, 2013-08
Abstract: The UK government introduced the Renewable Obligation (RO), a system of tradable quotas, to encourage the installation of renewable electricity capacity. Each unit of generation from renewables created a renewable obligation certificate (ROC). Electricity generators must either; earn ROCs through their own production, purchase ROCs in the market or pay the buy-out price to comply with the quota set by the RO. A unique aspect of this regulation is that all entities holding ROCs receive a share of the buy-out fund (the sum of all compliance purchases using the buy-out price). This set-up ensures that the difference between the market price for ROCs and the buy-out price should equal the expected share of the buy-out fund, as regulated entities arbitrage these two compliance options. The expected share of the buy-out fund depends on whether enough renewable generation is available to meet the quota. This analysis tests whether variables associated with renewable generation or electricity demand are correlated with, and thus can help predict, the price of ROCs.
Type: Working or Discussion Paper
Affiliation: Economics

Files in This Item:
File Description SizeFormat 
SEDP-2013-08-Bryan-Lange-MacDonald.pdf540.74 kBAdobe PDFView/Open

This item is protected by original copyright

Items in the Repository are protected by copyright, with all rights reserved, unless otherwise indicated.

If you believe that any material held in STORRE infringes copyright, please contact providing details and we will remove the Work from public display in STORRE and investigate your claim.