Activity Patterns in the Australian Green Certificate
Market
Ms Amy Coleman ([email protected])
Regina Betz, Johanna Cludius, Beatrice Petrovich, Iain MacGill
40th IAEE conference, Singapore, 20th of June 2017
Research questions & contributions
Research Questions:
 How did the market evolve over time?
 Who are the players involved in the green certificate market in
Australia?
 Can we distinguish between specific behavioural patterns of welldefined subset of players?
Contributions:
 First publicly available deep-dive analysis of Renewable Energy
Target Registry data
 Explorative study to derive further research questions
The REC Data Base
 The renewable energy certificates (RECs = 1 MWh new renewable generation) registry
is an electronic accounting system which provides 30 million actions on RECs carried
out between 18 May 2001 and 9 November 2016
 Information on the REC:
 Large Scale Generation Certificates (LGCs)
 Small-scale Technology Certificates (STCs)
 Australian State where generation is installed, generation year, technology
 Action data:
 Available on account level (which we aggregated on parent company level)
 Actions: Creating, transferring, surrendering, voluntary surrendering
 Additional info on actions: Time of action and status
 Information on the company (which we derived from the data or searched via internet):
 Liable party, Retailer, Financial sector, Large Load?
 No price data on each transfer available
Targets and technology deployment (GWh for LGC)
New government
reduced target
Split in Large
and Small scale
New government
increased target
Source: REC registry, Clean Energy Regulator
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Price and Transfer Volume Development of REC Market
Start in
2001 2%
target
9,500
GWh in
2010
Victoria
introduces
VRET
Target
increased to
20% 45,000
GWh in 2020
Solar credits
multiplier
Significant
reduction of
target 23.5%
33,000 GWh
in 2020
Split in Large
and Small
scale (LRET
= 41,000
GWh in
2020)
Source: Volumes REC Data and various sources for prices
5
Parent company split in 2015 (Number of companies)
Liable companies are electricity retailers and large loads
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Methodology: Cluster Analysis
 Cluster analysis is a multivariate technique for grouping datasets on the basis
of distance of each object
 Aim: to split datasets into groups (clusters) which exhibit high internal
homogeneity and high external heterogeneity
Var 1
Cluster method:
 Normalization of all variables
 2 Steps:
Ward’s hierarchical + k-means
 Test differences between
clusters for significance
Var 2
Cluster Variables
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Results: Cluster Centers
Results
 AGL and Origin (gentailers) very active traders since 2003; Origin and AGL traded a
large proportion of their trading internally in 2015 compared to 2003
 Only in 2003 there is a cluster for a group of companies that were trading & creating,
“medium active traders and creators” but were not liable entities (here you find some
large loads)
 In 2015 large traders can be distinguished into 3 separate clusters:



some have few internal transfers & create a smaller amount of RECs (= active traders),
Westpak, Macquarie Bank or Green Bank in this cluster
some have large internal transfers & create a larger amount of RECs (= active traders &
creators); AGL and Origin in this cluster
very few pure massive traders; ANZ in this cluster
 A separate cluster for “mainly creators" (companies that create more than they
surrender) does not exist in 2003, while two "mainly creators" clusters emerge in
2015:
- one with smaller creators who have a lower number of partners
- one with larger creators who have a higher number of partners
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Summary
Research Questions:
 How did the market evolve over time?
 Who are the players involved in the green certificate market in Australia?
 Can we distinguish between specific behavioural patterns of well-defined subset of
players?
Key results:
 Number of players is stable of time, but the liquidity and behavioural patterns change
 Cluster composition changes significantly from 2003 to 2015
 Few banks/financial players are very active in 2015, but only in REC trading; while
no significant activity at all for banks/financial players in 2003
 Huge increase in trading volume from 2003 to 2015
 However the share of companies who trade a large amount of RECs is low in 2003
and 2015 (<5%)
 Non traders disappear in 2015, while in 2003 they represented the majority of the
players (85% of the companies)
 However the number of companies who are not very active traders and on average
trade with only 1 counterparty still represent the majority of the players (91%) in 2015
Future Research Agenda
 Majority of companies passive: Do they produce their own RECs? Who is the one major
counterparty.
 What are the roles of banks? Do they only provide liquidity or do they speculate? Where
they active when prices did increase substantially?
 Why do some companies have high internal transfer volumes?
 How did the market of voluntary surrendering develop?
 What is the specific pattern observed for large loads?
 State owned companies vs. private owned companies: Do we see any differences?
 State specific patterns: Is there interaction with other policies (e.g. FIT, auctions)?
 Can we see difference between Small Scale and Large Scale?
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