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Real collars as alternative incentives for subsidizing energy facilities
Adkins, Roger Paxson, D.
Adkins, Roger
Paxson, D.
Publication Date
2019-06
End of Embargo
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© 2018 The University of Manchester and John Wiley & Sons Ltd.
This is the peer reviewed version of the following article: Adkins R and Paxson D (2019) Real collars as alternative incentives for subsidizing energy facilities. The Manchester School. 87(3): 428-454, which has been published in final form at https://doi.org/10.1111/manc.12253. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.
Peer-Reviewed
Yes
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openAccess
Accepted for publication
16/07/2018
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Abstract
We suggest that real collars may be acceptable incentives for encouraging development of low (or no) carbon energy generating facilities as an alternative for high feed‐in‐tariffs. We provide novel analytical solutions for real collars and partial collars, plus floor and ceiling partial derivatives. The ‘gains/losses’ of the energy generator as perceived parameter values change are compared to those of the government providing the collar, and floor or ceiling only, viewing the arrangement as a real option game between principal and agent. A volatility increase first increases, then decreases the ‘gains’ of the generator.
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Accepted manuscript
Citation
Adkins R and Paxson D (2019) Real collars as alternative incentives for subsidizing energy facilities. The Manchester School. 87(3): 428-454.
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Article