Modeling of Carbon Payment Impacts on Electricity Prices and Possibility for Mitigation of Negative Effects on Consumers

Carbon emission payment is considered as one of the widely used mechanisms to stimulate the shift towards low and non-carbon technologies in the power sector. As a special environmental tax, this payment can be accumulated on a competitive basis (via market price) or a regulatory basis. In the article, we use financial models of the power industry's segments to evaluate their required gross revenue as well as the average electricity price for end-users. We also observe possibilities for mitigation of negative price effect linked with support of non-carbon energy through carbon payment mechanism.