Pricing in quota obligation schemes for renewable energy. A stochastic model with reference to the Swedish quota obligation

The PhD thesis develops a stochastic model to explain pricing in Quota Obligation schemes for renewable energy (RE). It is based on the fact that electricity production from RE is depending on weather and other conditions, which leads to a random fluctuation. In the developed model the price for RE is depending on the probability of a lack of certificates at the end of an obligation period. In contrast to deterministic models, the stochastic model has a direct link between the price for RE and their high investment costs. Moreover, the stochastic model can be used to describe the development of prices over an obligation period. The model is adopted to the Swedish quota obligation. It is shown that the real RE prices there are much higher than the estimated prices derived from the model. This result is consistent to the fact that installed RE capacity in Sweden is much higher than necessary to fulfill the quota obligation.