The Effects of the Swedish TGC System on the Development of Wind Power Production - An empirical analysis of the impact of the certificate price

Abstract

This thesis aims to examine how the implementation of the Tradable Green Certificate (TGC) system in Sweden has affected the development of wind power production. The main purpose is to investigate whether there exists an impact of the certificate price on the amount of wind power produced. Literature suggests that the potential for wind power production in Sweden is substantial, but also that investors are restricted due to uncertain and varying certificate prices in the TGC system. Despite the great potentials and increased production, the share of wind power production in Sweden is still comparatively small. Furthermore, the interest for investing in wind power production has started to decrease lately. The results from the empirical analysis indicate that there is no evidence of an impact of the certificate price on wind power production, neither in its present nor lagged form. Thus, the price of certificates does not seem to affect the amount of wind power produced. This is consistent with the results of previous research, indicating that the empirical analysis is credible. Potential explanations for the insignificant certificate price are lengthy instalment processes for wind power plants and uncertain certificate prices. The TGC system could therefore be argued to be somewhat inefficient in its current form. Consequently, in order for Sweden to reach the high potential of wind power production, future research could examine whether a more stable system would be suitable.