Renewable Energy Investments of Electricity Enterprise With Carbon Quota Financing

• Published in: IEEE transactions on engineering management Vol. 71; pp. 8166 - 8191
• Main Authors: Chen, Wei, Zhang, Yexia, Chen, Jing, Ma, Yongkai
• Format: Journal Article
• Language: English
• Published: New York IEEE 2024; The Institute of Electrical and Electronics Engineers, Inc. (IEEE)
• Subjects: Carbon; Carbon dioxide; Carbon quota financing; Constraints; Costs; Demand; Electricity; Electricity pricing; Emissions control; Emissions trading; Energy; Faces; financial constraint; Financing; Industries; Investment; Investments; Renewable energy; renewable energy investment; Renewable energy sources; Renewable resources
• ISSN: 0018-9391; 1558-0040
• DOI: 10.1109/TEM.2024.3391171

This article examines two commonly used financial strategies of an electricity enterprise (EP): the carbon quota sale financing strategy (Strategy S), and the carbon quota pledge financing strategy (Strategy P), while considering a capital constraint. The findings show that Strategy S yields higher renewable energy investment and demand, as well as lower total carbon emissions, compared to Strategy P when the total carbon quota exceeds a certain threshold or when the EP does not have the financial constraint under either strategy. Conversely, when the EP faces the financial constraint under both strategies, the opposite holds true. The study also reveals that an increase in the renewable energy preference degree does not always lead to beneficial outcomes in terms of renewable energy investments and carbon reductions when the EP faces the financial constraint. Under this condition, electricity prices, demands, and total carbon emissions increase, while renewable energy investments remain unaffected by changes in the renewable energy preference degree. In addition, for a lower renewable energy preference degree, combining Strategy S (or Strategy P) with a higher (or lower) total carbon quota leads to lower electricity price and greater renewable energy investment. However, for a higher renewable energy preference degree, neither strategy results in lower electricity price nor larger renewable energy investment simultaneously. Moreover, whether the EP is constrained by financing or not, an increase in the cost coefficient of renewable energy investment adversely affects renewable energy investments, demands, total carbon emissions, and the EP's profits. However, when the EP faces the financing constraint, the initial carbon trading price proves beneficial in increasing both the renewable energy investments and demands, as well as reducing total carbon emissions.