DOCSLIB.ORG

Official Master's Degree in the Electric Power Industry

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Official Master's Degree in the Electric Power Industry UNIVERSIDAD PONTIFICIA COMILLAS ESCUELA TÉCNICA SUPERIOR DE INGENIERÍA (ICAI) OFFICIAL MASTER'S DEGREE IN THE ELECTRIC POWER INDUSTRY Master’s Thesis THE WACC AS A METHODOLOGY TO APPROXIMATE THE SPREAD FOR THE ALLOWED RATE OF RETURN FOR RENEWABLE GENERATION AND GENERATION IN ISOLATED ENERGY SYSTEMS IN SPAIN Author: Raúl Arturo Escobar Segura Supervisor: Henar Soto Tejero Madrid, July 2017 Official Master's Degree in the Electric power lndustry (MEpl) Erasmus Mundus Joint Master in Economics and Management of Network lndustries (EMIN) Master's Thesis Presentation Authorization THE STUDENT: RAUL ARTURO ESCOBAR SEGURA ß-*{- kas.t\.-r S THE SUPERVISOR TEJERO Signed Date: ?1..t .AÇ.t ..?9l? Authorization of the Master's Thesis Coordinator Dr. Luis Olmos Camacho Signed.: UNIVERSIDAD PONTIFICIA COMILLAS & UNIVERITÉ PARIS-SUD Summary COMISIÓN NACIONAL DE LOS MERCADOS Y LA COMPETENCIA (CNMC) Master in Economics and Management of Network Industries (EMIN) Master in the Electric Power Industry (MEPI) The WACC as a Methodology to Approximate the Spread for the Allowed Rate of Return for Renewable Generation and Generation in Isolated Energy Systems in Spain The Spanish electricity regulatory framework states that the regulated sectors must be remunerated through a reasonable rate of return, calculated as a spread to be added to the average government bonds yield. In that context, the objective of this work is to use the well-known financial model of the Weighted Average Cost of Capital (WACC) to approximate the allowed rate of return for renewable energy generation and generation in the isolated energy systems. As of today, the allowed rate of return has been set without any clear methodology. This work pretends to provide the regulator with a replicable methodology that can be used in the following regulatory periods and that is clear to all stakeholders. The WACC / CAPM model is selected because of its widespread use among energy regulators and within different industries. The methodology followed consisted on an extensive analysis of the Spanish regulatory framework and a comprehensive benchmarking of selected European cases that could provide additional insights and research elements. Although in general this work has relied on the WACC /CAPM model, it has been supplemented: in spite of its extensive use and strong grounding in financial theory, the WACC/CAPM model has certain limitations that make it unsuitable as the sole model for assessing rates of return to renewable projects. To tackle some of these insufficiencies, the model has been complemented to include asymmetric risks and price risk. A liquidity test was also added to the methodology. In the same way, it was decided that the peer group of companies used to calculate the rate of return for generation in the isolated systems will be the same as the one used for transmission and distribution activities. Regarding the methodological choices to the CAPM, like frequency of the data or reference market used, a complete analysis is presented. The results suggest that the WACC/CAPM based rates of return are lower (in approximately 60bps) than the allowed rates in the current regulatory framework. This can be explained through the differences in the economic environment when those rates were set and nowadays, even though historical data of the past 6 years have been considered. These differences in the economic situation should be taken into account on the next regulatory period. Regarding the existing spread between the rate for renewables and the rest of regulated activities (Namely, T&D and Isolated Systems) the obtained results are in line with the present regulatory framework, with a difference of about 100bps. Acknowledgements I would like to express my gratitude first to Ms. Henar Soto Tejero of the Energy Division of the CNMC for supervising this thesis project and whose expertise, understanding, and constant support are an integral part of this work. I would like to thank as well to Francisco Fournier, his help and contributions where a vital part of this master’s thesis. Finally I want to thank the CNMC for making possible this internship experience. A special thanks to the EMIN coordinators and supporting staff for their support and guidance during these two years of constant learning and adventures and to my fellow EMIN friends that made this time an unforgettable experience. In addition, I want to thank my family and friends for their support and love. 4 Contents Summary ............................................................................................................................................ 2 Contents.............................................................................................................................................. 4 List of Tables ...................................................................................................................................... 7 Chapter 1 ............................................................................................................................................ 9 1. Introduction ............................................................................................................................... 9 1.1. Motivation of the thesis topic .............................................................................................. 10 1.2. Objectives ............................................................................................................................. 12 1.3. Structure of the report ......................................................................................................... 12 Chapter 2 .......................................................................................................................................... 14 2. Theoretical principles ............................................................................................................... 14 2.1. Renewable energy sources (RES) ......................................................................................... 14 2.2. Isolated Insular Energy Systems ........................................................................................... 17 2.3. Smart Grids ........................................................................................................................... 19 2.4. Weighted Average Cost of Capital (WACC) .......................................................................... 21 2.5. Allowed Rate of Return ........................................................................................................ 23 Chapter 3 .......................................................................................................................................... 24 3. General Framework .................................................................................................................. 24 3.1. Industry Framework in Spain ............................................................................................... 24 3.1.1. Renewable Energy Sources (RES) in Spain ....................................................................... 25 3.1.2. Isolated Energy Systems in Spain ..................................................................................... 29 3.2. Regulatory Framework in Spain ........................................................................................... 32 3.2.1. Remuneration to Renewable Energy Generation ............................................................ 33 3.2.2. Remuneration to the generation in isolated systems ...................................................... 39 3.2.3. Remuneration to Smart Grids investments ..................................................................... 43 Chapter 4 .......................................................................................................................................... 44 4. State of the Art ......................................................................................................................... 44 4.1. Previous methodology proposed for T&D activities ............................................................ 44 4.1.1. Key steps to identify the relevant features of the methodology ..................................... 44 4.1.2. Defining the general parameters ..................................................................................... 53 4.1.3. Cost of equity ................................................................................................................... 55 4.1.4. Cost of debt ...................................................................................................................... 58 4.2. European Benchmarking ...................................................................................................... 64 4.2.1. British methodology for RES WACC ................................................................................. 64 4.2.2. DiaCore Report, February 2016........................................................................................ 68 4.2.3. France: remuneration in the “Zones non interconnectées” (ZNI) ................................... 72 4.2.4. Italy: Sardinia and Sicily .................................................................................................... 73 4.2.5. Greece: Crete ................................................................................................................... 74 4.3. CNMC report on the airport sector .....................................................................................
Load more

Recommended publications
  • AD-HOC RELEASE Pursuant to Section 15 of the German Securities Trading Act (Wphg)
    AD-HOC RELEASE Pursuant to Section 15 of the German Securities Trading Act (WpHG) Phoenix Solar AG sells European O&M business and revises forecast for 2014 Sulzemoos, 6 August 2014 / Phoenix Solar AG (ISIN DE000A0BVU93) has sold its operation and maintenance activities (O&M business) in Europe to SMA Solar Technology AG by way of a contract dated 6 August 2014 (asset deal). The parties agreed to keep the contractual content confidential. The proceeds from the sale are to be used to repay debt and to strengthen the company's core operations. The O&M activities of the company's subsidiaries, particularly in the USA and Asia where O&M is run independently, are not the object of the sales contract and are not affected by the disposal. The validity of the disposal is still contingent on individual prerequisites which are to be fulfilled in the coming weeks. In view of its business performance in the first six months of the current financial year which was characterised above all by considerable delays in planned order intake in the USA, Phoenix Solar AG no longer assumes that the goals targeted for the financial year 2014 can be achieved. The Executive Board has therefore decided to revise the baseline forecast downwards for 2014 as a whole. In the financial year 2014, the company now anticipates a revenue decline for the Group of around 35 to 50 percent compared with the financial year 2013. This corresponds to a revenue corridor of between EUR 70 million and EUR 100 million (2013: EUR 141.2 million).
    [Show full text]
  • Press Release
    PRESS RELEASE Phoenix Solar AG enlarges its Executive Board Olaf Laber (48) assigned responsibility for new business models and for the regions of Europe and the Middle East Sulzemoos, 19 December 2013 / Phoenix Solar AG (ISIN DE000A0BVU93), an international photovoltaic system integrator that is listed in the Frankfurt Stock Exchange's Prime Standard, is enlarging its Executive Board. The Supervisory Board has appointed Olaf Laber (48) to the Executive Board, effective 1 January 2014. Laber will be responsible for the areas of New Business Models, Germany, Europe and the Middle East. Following the successful restructuring of the company, the Supervisory Board and Executive Board are convinced that this reinforcement to management will advance the company on its path to new growth. Olaf Laber has a long track record in international management, particularly in building up new business and sales operations, and has successfully implemented tasks similar to those he will be assuming at Phoenix Solar. With a degree in information management (Diplom- Informationswirt), Laber's last position was as Vice President Emerging Business at Intershop Communications AG in Jena. Prior to this, he worked as Director Business Development for Actian Corporation in Redwood City (USA). About Phoenix Solar AG Phoenix Solar AG, which is based at Sulzemoos, near Munich, Germany, is an internationally operating photovoltaic system integrator. The Group develops, plans, constructs and assumes operational management of large photovoltaic power plants, and is a specialist wholesaler for complete solar electricity systems, solar modules and related equipment. With its subsidiaries on three continents, the company has sold solar modules with an output of well over one gigawatt worldwide since it was founded.
    [Show full text]
  • Pressemitteilung Der SMA Technologie AG
    SMA Solar Technology AG – Press Release SMA Solar Technology AG Purchases European O&M Business from Phoenix Solar AG Niestetal/Sulzemoos, August 6, 2014—SMA Solar Technology AG (SMA/FBW: S92) and Phoenix Solar AG today signed a contract for the selling of European operations and maintenance activities (O&M business) from Phoenix Solar to SMA. This transaction sees SMA systematically implementing its growth strategy in the service business. “Operation and maintenance services for PV power plants are an important driver of our growth strategy in the service business. After successfully establishing this business field in North America with 200 MW, we are now looking to develop the high-volume European market for SMA through the acquisition of the O&M business from Phoenix Solar. We will continue to expand our O&M services in Europe and North America and thus benefit from our outstanding expertise and installed basis,” explained SMA Chief Executive Officer Pierre-Pascal Urbon. Since the inverter is a central component in any PV system, many owners and PV system operators regard the leading manufacturer, SMA, as the natural partner of choice for operation and maintenance services. In addition, the O&M business offers sustainable and stable sales and yields for SMA. “It was not an easy decision for us to part with our Ulm-based O&M business. However, in view of our strategic focus on Asia and the USA, providing support for large solar parks in Europe was no longer readily compatible. Seen from this standpoint, the business did not have a strategic perspective. By contrast, we know that the prospects for our European O&M activities are very good with SMA, and that our former customers will continue to receive the best possible support.
    [Show full text]
  • Press Release
    PRESS RELEASE Phoenix Solar to build Singapore’s largest PV system C M M Marketing Management Pte Ltd, the distribution arm of Sheng Siong Group Ltd, to cover rooftop of its HQ with PV modules Solar PV proves commercial viability in Singapore Sulzemoos, 25 September 2013 / Phoenix Solar Pte Ltd., the Singapore based subsidiary of Phoenix Solar AG (ISIN DE000A0BVU93), an international photovoltaic system integrator that is listed on the Prime Standard of the Frankfurt Stock Exchange, will design and construct a photovoltaic (PV) system with a rated capacity of at least 1.2 MWp for C M M Marketing Management Pte Ltd (“CMM”), a wholly-owned subsidiary of mainboard-listed holding company, Sheng Siong Group Ltd (“Sheng Siong”). CMM selected Phoenix Solar to build the PV system on its corporate headquarters and centralised distribution centre at 6 Mandai Link (“CMM Facility”). The PV system will occupy an area of approximately 11’000 m² (or about 118’400 square feet), exploiting its available roof area to the fullest extent. Upon completion within the year, this will be the largest PV system in Singapore. The PV system is expected to start producing green energy by the end of 2013, and supply at least 15 percent of CMM Facility’s electricity consumption. It will also mitigate at least 730 metric tonnes per year of CO2 from Singapore’s gas-fired power stations. “The commercial and environmental returns of this project make it a viable business decision, which will continue to yield benefits for a long time,” affirms Lim Hock Chee, CEO of Sheng Siong.
    [Show full text]
  • EUROPEAN RENEWABLES: EQUITY RESEARCH 13 January 2010
    ler0705_renewables cover_2010 outlook_jan 10_final.qxp 12/01/2010 21:30 Page 1 EUROPEAN RENEWABLES:EUROPEAN OUTLOOK 2010 EQUITY RESEARCH 13 January 2010 EUROPEAN RENEWABLES: 2010 OUTLOOK COMING OF AGE Barclays Capital does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. This research report has been prepared in whole or in part by research analysts based outside the US who are not registered/qualified as research analysts with FINRA. PLEASE SEE ANALYST(S) CERTIFICATION(S) AND IMPORTANT DISCLOSURES BEGINNING ON PAGE 338. Barclays Capital | European Renewables: 2010 Outlook CONTENTS EXECUTIVE SUMMARY 3 EUROPEAN RENEWABLES – CONVERTIBLES 13 RECOMMENDATION CHANGES 16 RECENT COMPANY VISITS 19 EUROPEAN RENEWABLES BENCHMARKING 27 RENEWABLES HEALTH OUTLOOK 40 HISTORICAL VALUATION 44 CONCENTRATING SOLAR THERMAL 48 GLOBAL SECTOR VIEW 52 CARBON: THE EU ETS: THE ONLY WAY IS FLAT 54 APPENDIX 1: BENCHMARKING 59 APPENDIX 2: EUROPEAN RENEWABLES VALUATION MODEL 62 COMPANIES SECTION 64 13 January 2010 1 Barclays Capital | European Renewables: 2010 Outlook Summary of our Rating, Price Target and Earnings Changes in this Report (all changes are shown in bold) Company Rating Price Price Target EPS FY1 (E) EPS FY2 (E) Old New 11-Jan-10 Old New %Chg Old New %Chg Old New %Chg European Renewables: Energy Efficiency
    [Show full text]
  • Renewable Energy in the GCC Countries Resources, Potential, and Prospects
    Renewable Energy in the GCC Countries Resources, Potential, and Prospects Renewable Energy in the GCC Countries Resources, Potential, and Prospects Imen Jeridi Bachellerie Gulf Research Center The cover image shows the Beam Down Pilot Project at Masdar City. Photo Credit: Masdar City Gulf Research Center E-mail: [email protected] Website: www.grc.net First published March 2012 Gulf Research Center © Gulf Research Center 2012 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of the Gulf Research Center. ISBN: 978-9948-490-05-0 The opinions expressed in this publication are those of the author alone and do not necessarily state or reflect the opinions or position of the Gulf Research Center or the Friedrich-Ebert-Stiftung. By publishing this volume, the Gulf Research Center (GRC) seeks to contribute to the enrichment of the reader’s knowledge out of the Center’s strong conviction that ‘knowledge is for all.’ Dr. Abdulaziz O. Sager Chairman Gulf Research Center About the Gulf Research Center The Gulf Research Center (GRC) is an independent research institute founded in July 2000 by Dr. Abdulaziz Sager, a Saudi businessman, who realized, in a world of rapid political, social and economic change, the importance of pursuing politically neutral and academically sound research about the Gulf region and disseminating the knowledge obtained as widely as possible. The Center is a non-partisan think-tank, education service provider and consultancy specializing in the Gulf region.
    [Show full text]
  • Disclosure of Insider Information Pursuant to Article 17 of the Market Abuse Regulation (MAR)
    Disclosure of insider information pursuant to Article 17 of the Market Abuse Regulation (MAR) Phoenix Solar AG is forced to file for insolvency • Phoenix Solar AG is faced with approximately USD 8 million reimbursement claims following a drawdown of project-related letters of credit by a US customer, resulting in the illiquidity of Phoenix Solar AG Sulzemoos, December 8th, 2017 / Following the drawdown of project- related letters of credit in the amount of approximately USD 8 million by a large customer of Phoenix Solar Inc. (the US-subsidiary of Phoenix Solar AG), the parent company Phoenix Solar AG is obligated to reimburse the issuing banks immediately under its existing financing agreements. Such reimbursement claims exceed the financial capabilities of Phoenix Solar AG, thus resulting in the illiquidity of Phoenix Solar AG and forcing the Executive Board to file for insolvency. The Executive Board will, therefore, submit an insolvency filing to the relevant insolvency court in Munich in the course of next week. Attempts by the Company's management to find a solution with the said US customer and the Company’s banking consortium in Germany have failed. Communicating Person: Dr. Joachim Fleïng Language: English Company: Phoenix Solar AG Hirschbergstr. 4 85254 Sulzemoos Tel.: +49 8135 938315 Fax: +49 8135 938429 Email: [email protected] Internet: www.phoenixsolar-group.com ISIN DE000A0BVU93 WKN A0BVU9 Stock exchanges: XETRA, Frankfurt (Prime Standard), Munich (M:access), Stuttgart, Berlin, Düsseldorf, Hamburg, Hannover, Tradegate Exchange About Phoenix Solar AG Phoenix Solar AG is an internationally operating photovoltaic integrator based in Sulzemoos near Munich, Germany. The Group develops, engineers, constructs and operates large-scale photovoltaic plants.
    [Show full text]
  • Capital Investment for Renewables Presentation to the IEA Working Group
    Capital Investment for Renewables Presentation to the IEA Working Group Rupesh Madlani Senior Research Analyst - Renewables +44 203 134 7503 [email protected] Barclays Capital does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Sector specialists are responsible for keeping sales and trading up to date on research views in their sector. Sector specialists are not part of the Barclays Capital equity research organisation. Customers of Barclays Capital in the United States can receive independent, third-party research on the company or companies covered in this report, at no cost to them, where such research is available. Customers can access this independent research at www.lehmanlive.com or can call 1-800-253-4626 to request a copy of this research. Investors should consider this report as only a single factor in making their investment decision. PLEASE SEE ANALYST(S) CERTIFICATION(S) AND IMPORTANT DISCLOSURES, INCLUDING FOREIGN AFFILIATE DISCLOSURES, BEGINNING ON PAGE 94 Barclays Group – Renewables and Wind Farm Investment Active in Renewables: Balance sheet summary £bn 31-Dec-08 30-Jun-09 Project financing for individual projects Total assets 2,053 1,545 Lending to Renewables Corporates Derivative gross-up 917 507 Providing access to capital markets AUM on balance sheet 69 66 Equity stakes in Renewables projects Settlement balances 30 35 Goodwill & Intangible assets
    [Show full text]
  • Headline, Arial 12, Schwarz Und Fett
    PRESS RELEASE Phoenix Solar Completes Ground-Mount Solar Facility At Morgan Stanley’s Purchase, NY, Corporate Campus • In the past two years Phoenix Solar installed over 60 megawatts of solar projects in the U.S.A San Ramon, Ca., USA, and Sulzemoos, Germany, 26 February 2014 / Phoenix Solar Inc. today announced the completion of an 823-kilowatt- peak ground-mount solar facility on six acres at Morgan Stanley’s corporate campus in Purchase, New York. Phoenix Solar Inc. is a subsidiary of Phoenix Solar AG (ISIN DE000A0BVU93), an international photovoltaic system integrator that is listed on the Prime Standard of the Frankfurt Stock Exchange. Phoenix Solar provided all engineering services, procured a portion of the components, and managed the construction of the solar facility. The ground-mount solar facility is expected to generate approximately 1,000 MWh of electricity per year, offsetting approximately 5% of the total electricity used at Morgan Stanley’s building, and up to 25% during daily peak production. The solar project required the installation of more than 3,000 solar panels. “With the successful and on-time completion of this solar installation for Morgan Stanley, a leading global financial services firm, Phoenix Solar now has engineered and installed over 60 megawatts of solar projects in the U.S.A. in just the past two years,” said Dr. Murray Cameron, CEO and President of U.S.-based Phoenix Solar Inc., and Executive Board Member of parent company Phoenix Solar AG. About Phoenix Solar AG Phoenix Solar AG, which is based at Sulzemoos, near Munich, Germany, is an internationally operating photovoltaic system integrator.
    [Show full text]
  • Energy: Thinking Ahead Annual Report 2014
    ENERGY: THINKING AHEAD ANNUAL REPORT 2014 SMA SOLAR TECHNOLOGY AG SMA AT A GLANCE SMA Group 2014 2013 2012 2011 2010 Sales in € million 805.4 932.5 1,463.4 1,676.3 1,920.1 International share in % 76.0 71.0 56.3 53.6 44.9 Inverter output sold MW 5,051 5,361 7,188 7,591 7,750 Capital expenditure in € million 75.5 53.2 100.2 160.2 158.3 Depreciation in € million 106.5 83.6 69.9 50.4 31.3 EBITDA in € million –58.4 –5.5 171.9 290.7 548.1 EBITDA margin in % –7.3 –0.6 11.7 17.3 28.5 Consolidated net result in € million –179.3 –66.9 75.1 166.1 365.0 Earnings per share1 € –5.16 –1.92 2.16 4.79 10.52 Employees2 5,037 5,141 5,584 5,532 4,466 in Germany 3,515 3,736 4,649 4,670 4,057 abroad 1,522 1,405 935 862 409 SMA Group 12/31/14 12/31/13 12/31/12 12/31/11 12/31/10 Total assets in € million 1,180.3 1,259.9 1,328.7 1,374.3 1,251.5 Equity in € million 552.0 724.4 820.7 789.3 728.4 Equity ratio in % 46.8 57.5 61.8 57.4 58.2 Net working capital3 in € million 251.0 247.6 268.0 281.7 284.6 Net working capital ratio4 in % 31.2 26.6 18.3 16.8 14.8 Net cash5 in € million 225.4 329.7 446.3 473.3 523.4 1 Converted to 34,700,000 shares 2 Average during the period; without temporary employees 3 Inventories and trade receivables minus trade payables 4 Relating to the last twelve months (LTM) 5 Cash holdings + time deposits + asset management + cash on hand pledged as collatoral – loan liabilities (excluding derivatives) SMA WORLDWIDE Headquarters Foreign companies COMPANY PROFILE SMA Solar Technology AG is a global leader in the development, ­production­and­sale­of­PV­inverters­and­offers­innovative­key­tech­ nologies for future power supply structures.
    [Show full text]
  • Sunshine and Stock Returns: Weather Effects in Frankfurt
    Sunshine and Stock returns: Weather effects in Frankfurt V. Bouten1 Supervised by dr. J.J. Bosma Master thesis University of Groningen June 2018 Abstract This paper examines the presence of both rational and behavioral weather effects on stock market returns. The existence of weather effects has been tested by adding sunshine as a variable in the Fama-French three-factor model. It was hypothesized that government policy on renewable energy generation would engender rational weather effects. Behavioral weather effects resulting from changes in investor optimism were expected to be absent. This study utilizes panel data on 399 equities listed on the Frankfurt stock exchange from 1995-2017. The findings did not support the presence of either type of weather effects. Keywords: Stock prices, weather, government policy JEL codes: G12, G41, Q48 1 Corresponding author: Valentijn Bouten, student MSc. Finance and Msc. Economics at the University of Groningen. Postal address: University of Groningen, Faculty of Economics and Business, Nettelbosje 2, P.O. Box 800, 9700 AV Groningen, The Netherlands. Email: [email protected]. Introduction In traditional finance theory, the efficient market hypothesis (EMH) claims that market participants are rational and that the securities markets only reflect relevant economic information. These assumptions imply that all assets are correctly priced and that future stock prices follow a random walk pattern. Therefore, it is not possible to earn abnormal returns from mispricing according to the EMH. Yet, multiple researchers have documented patterns in the market that appear to violate the assumptions of the EMH (e.g., French, 1980; Jones and Litzenberger; 1970, Thaler, 1987).
    [Show full text]
  • Document De Travail Working Paper 2021-13
    Green Energy Indexes & Financial Markets: An In-Depth Look Document de Travail Capucine Nobletz Working Paper 2021-13 EconomiX - UMR7235 Université Paris Nanterre Bâtiment G - Maurice Allais, 200, Avenue de la République 92001 Nanterre cedex Email : [email protected] Green Energy Indexes & Financial Markets: An In-Depth Look Capucine NOBLETZ∗ May 13, 2021 Abstract This paper aims to provide better transparency around green energy indexes. After selecting green energy indexes that meet the established criteria, we build a database listing the companies in these indexes and compare them with a financial benchmark. Our study allows investors to adjust their hedging horizons with green concerns, to pave the way for further academic analyses, or issue a new call to public authorities on the need to redirect financial flows towards greener activities. Key words: Financial markets, Green energy indexes. JEL classification: G15, Q42. Acknowledgements: The author would like to thank Valérie Mignon and her colleagues at the EconomiX laboratory for their availability and precious advice. ∗EconomiX-CNRS, UPL, Univ Paris Nanterre, CNRS, 92000 Nanterre France. Emails: [email protected] / [email protected] Introduction Scientific researchers are unanimous: it is urgent to limit global warming to less than two degrees relative to the pre-industrial level to curb its effects on the ecosystem and humankind. The rise in temperatures, precipitations, melting ice, or the increase in ocean acidification have drastically changed the environment and, therefore, the life cycle of land and marine species. Human is impacted, global warming threatens food security, risks aggravating health problems and generating migratory movements. The poorest countries and populations are the most at risk, thus increasing existing inequalities (IPCC, 2014).
    [Show full text]