IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v148y2021ipas0301421520306443.html
   My bibliography  Save this article

An analysis of Turkey's solar PV auction scheme: What can Turkey learn from Brazil and South Africa?

Author

Listed:
  • Sirin, Selahattin Murat
  • Sevindik, Irem

Abstract

As global investments continue in renewable energy technologies, investment costs have declined significantly. Meanwhile, many governments have shifted from pre-set renewable support schemes to auction schemes in order to introduce competition in price setting. Turkey has initiated Renewable Energy Resource Zone (RERZ) auctions to promote solar photovoltaic (PV) and wind technologies. We examine the first of these auctions, Solar PV RERZ, which has ambitious targets in terms of increasing solar PV capacity and enhancing domestic competence in solar technologies. Despite the auction being hailed as a success in terms of low prices, we utilize the Levelized Cost of Electricity generation (LCOE) analysis to demonstrate that the project is vulnerable to macroeconomic shocks and financial risks. Model results show that the capacity factor is the most prominent factor in costs, and 10% change in the capacity factor affects the LCOE about the same rate. Investment cost and interest rate are the other major factors affecting the LCOE. Based on these results, we make recommendations by discussing how Turkey can improve its auction design by incorporating some of the elements used by Brazil and South Africa.

Suggested Citation

  • Sirin, Selahattin Murat & Sevindik, Irem, 2021. "An analysis of Turkey's solar PV auction scheme: What can Turkey learn from Brazil and South Africa?," Energy Policy, Elsevier, vol. 148(PA).
    • Handle: RePEc:eee:enepol:v:148:y:2021:i:pa:s0301421520306443
    DOI: 10.1016/j.enpol.2020.111933
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301421520306443
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.enpol.2020.111933?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Sirin, Selahattin Murat & Erdogan, Fakir H., 2013. "R&D expenditures in liberalized electricity markets: The case of Turkey," Renewable and Sustainable Energy Reviews, Elsevier, vol. 24(C), pages 491-498.
    2. Kumbaroglu, Gürkan & Madlener, Reinhard & Demirel, Mustafa, 2008. "A real options evaluation model for the diffusion prospects of new renewable power generation technologies," Energy Economics, Elsevier, vol. 30(4), pages 1882-1908, July.
    3. Negro, Simona O. & Alkemade, Floortje & Hekkert, Marko P., 2012. "Why does renewable energy diffuse so slowly? A review of innovation system problems," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(6), pages 3836-3846.
    4. Bointner, Raphael, 2014. "Innovation in the energy sector: Lessons learnt from R&D expenditures and patents in selected IEA countries," Energy Policy, Elsevier, vol. 73(C), pages 733-747.
    5. Erdogdu, Erkan, 2011. "An analysis of Turkish hydropower policy," Renewable and Sustainable Energy Reviews, Elsevier, vol. 15(1), pages 689-696, January.
    6. Karakosta, Charikleia & Doukas, Haris & Psarras, John, 2010. "Technology transfer through climate change: Setting a sustainable energy pattern," Renewable and Sustainable Energy Reviews, Elsevier, vol. 14(6), pages 1546-1557, August.
    7. Ritzenhofen, Ingmar & Spinler, Stefan, 2016. "Optimal design of feed-in-tariffs to stimulate renewable energy investments under regulatory uncertainty — A real options analysis," Energy Economics, Elsevier, vol. 53(C), pages 76-89.
    8. Frank, Alejandro Germán & Gerstlberger, Wolfgang & Paslauski, Carolline Amaral & Lerman, Laura Visintainer & Ayala, Néstor Fabián, 2018. "The contribution of innovation policy criteria to the development of local renewable energy systems," Energy Policy, Elsevier, vol. 115(C), pages 353-365.
    9. Bürer, Mary Jean & Wüstenhagen, Rolf, 2009. "Which renewable energy policy is a venture capitalist's best friend? Empirical evidence from a survey of international cleantech investors," Energy Policy, Elsevier, vol. 37(12), pages 4997-5006, December.
    10. Becker, Bastian & Fischer, Doris, 2013. "Promoting renewable electricity generation in emerging economies," Energy Policy, Elsevier, vol. 56(C), pages 446-455.
    11. Kreiss, Jan & Ehrhart, Karl-Martin & Haufe, Marie-Christin, 2017. "Appropriate design of auctions for renewable energy support – Prequalifications and penalties," Energy Policy, Elsevier, vol. 101(C), pages 512-520.
    12. Kylili, Angeliki & Fokaides, Paris A., 2015. "Competitive auction mechanisms for the promotion renewable energy technologies: The case of the 50MW photovoltaics projects in Cyprus," Renewable and Sustainable Energy Reviews, Elsevier, vol. 42(C), pages 226-233.
    13. Erdem, Z. Bengü, 2010. "The contribution of renewable resources in meeting Turkey's energy-related challenges," Renewable and Sustainable Energy Reviews, Elsevier, vol. 14(9), pages 2710-2722, December.
    14. Kaya, Durmus, 2006. "Renewable energy policies in Turkey," Renewable and Sustainable Energy Reviews, Elsevier, vol. 10(2), pages 152-163, April.
    15. Blazquez, Jorge & Nezamuddin, Nora & Zamrik, Tamim, 2018. "Economic policy instruments and market uncertainty: Exploring the impact on renewables adoption," Renewable and Sustainable Energy Reviews, Elsevier, vol. 94(C), pages 224-233.
    16. Gosens, Jorrit & Lu, Yonglong, 2013. "From lagging to leading? Technological innovation systems in emerging economies and the case of Chinese wind power," Energy Policy, Elsevier, vol. 60(C), pages 234-250.
    17. Polzin, Friedemann & Migendt, Michael & Täube, Florian A. & von Flotow, Paschen, 2015. "Public policy influence on renewable energy investments—A panel data study across OECD countries," Energy Policy, Elsevier, vol. 80(C), pages 98-111.
    18. Toklu, E. & Güney, M.S. & IsIk, M. & ComaklI, O. & Kaygusuz, K., 2010. "Energy production, consumption, policies and recent developments in Turkey," Renewable and Sustainable Energy Reviews, Elsevier, vol. 14(4), pages 1172-1186, May.
    19. Peter Cramton, 2017. "Electricity market design," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 33(4), pages 589-612.
    20. Wikus Kruger & Anton Eberhard, 2018. "Renewable energy auctions in sub‐Saharan Africa: Comparing the South African, Ugandan, and Zambian Programs," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 7(4), July.
    21. Shrimali, Gireesh & Konda, Charith & Farooquee, Arsalan Ali, 2016. "Designing renewable energy auctions for India: Managing risks to maximize deployment and cost-effectiveness," Renewable Energy, Elsevier, vol. 97(C), pages 656-670.
    22. Winkler, Jenny & Magosch, Magdalena & Ragwitz, Mario, 2018. "Effectiveness and efficiency of auctions for supporting renewable electricity – What can we learn from recent experiences?," Renewable Energy, Elsevier, vol. 119(C), pages 473-489.
    23. Sampaio, Priscila Gonçalves Vasconcelos & González, Mario Orestes Aguirre & de Vasconcelos, Rafael Monteiro & dos Santos, Marllen Aylla Teixeira & de Toledo, José Carlos & Pereira, Jonathan Paulo Pinh, 2018. "Photovoltaic technologies: Mapping from patent analysis," Renewable and Sustainable Energy Reviews, Elsevier, vol. 93(C), pages 215-224.
    24. Dobrotkova, Zuzana & Surana, Kavita & Audinet, Pierre, 2018. "The price of solar energy: Comparing competitive auctions for utility-scale solar PV in developing countries," Energy Policy, Elsevier, vol. 118(C), pages 133-148.
    25. Karaveli, Abdullah Bugrahan & Soytas, Ugur & Akinoglu, Bulent G., 2015. "Comparison of large scale solar PV (photovoltaic) and nuclear power plant investments in an emerging market," Energy, Elsevier, vol. 84(C), pages 656-665.
    26. Lund, P.D., 2009. "Effects of energy policies on industry expansion in renewable energy," Renewable Energy, Elsevier, vol. 34(1), pages 53-64.
    27. World Bank, 2009. "Turkey - National Innovation and Technology System : Recent Progress and Ongoing Challenges," World Bank Publications - Reports 18612, The World Bank Group.
    28. Rego, Erik Eduardo & Parente, Virginia, 2013. "Brazilian experience in electricity auctions: Comparing outcomes from new and old energy auctions as well as the application of the hybrid Anglo-Dutch design," Energy Policy, Elsevier, vol. 55(C), pages 511-520.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Münch, Florian Anselm & Marian, Adela, 2022. "The design of technical requirements in public solar auctions: Evidence from India," Renewable and Sustainable Energy Reviews, Elsevier, vol. 154(C).
    2. Juárez-Luna, David & Urdiales, Eduardo, 2021. "Participación de la capacidad fotovoltaica instalada en México: un análisis benchmarking [Share of installed photovoltaic capacity in Mexico: a benchmarking analysis]," MPRA Paper 114589, University Library of Munich, Germany.
    3. del Río, Pablo & Kiefer, Christoph P., 2023. "Academic research on renewable electricity auctions: Taking stock and looking forward," Energy Policy, Elsevier, vol. 173(C).
    4. Safarzadeh, Soroush & Hafezalkotob, Ashkan & Jafari, Hamed, 2022. "Energy supply chain empowerment through tradable green and white certificates: A pathway to sustainable energy generation," Applied Energy, Elsevier, vol. 323(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Münch, Florian Anselm & Marian, Adela, 2022. "The design of technical requirements in public solar auctions: Evidence from India," Renewable and Sustainable Energy Reviews, Elsevier, vol. 154(C).
    2. Matthäus, David, 2020. "Designing effective auctions for renewable energy support," Energy Policy, Elsevier, vol. 142(C).
    3. Anatolitis, Vasilios & Azanbayev, Alina & Fleck, Ann-Katrin, 2022. "How to design efficient renewable energy auctions? Empirical insights from Europe," Energy Policy, Elsevier, vol. 166(C).
    4. del Río, Pablo & Kiefer, Christoph P., 2023. "Academic research on renewable electricity auctions: Taking stock and looking forward," Energy Policy, Elsevier, vol. 173(C).
    5. Kitzing, Lena & Siddique, Muhammad Bilal & Nygaard, Ivan & Kruger, Wikus, 2022. "Worth the wait: How South Africa's renewable energy auctions perform compared to Europe's leading countries," Energy Policy, Elsevier, vol. 166(C).
    6. Bose, A.S. & Sarkar, S., 2019. "India's e-reverse auctions (2017–2018) for allocating renewable energy capacity: An evaluation," Renewable and Sustainable Energy Reviews, Elsevier, vol. 112(C), pages 762-774.
    7. Polzin, Friedemann & Egli, Florian & Steffen, Bjarne & Schmidt, Tobias S., 2019. "How do policies mobilize private finance for renewable energy?—A systematic review with an investor perspective," Applied Energy, Elsevier, vol. 236(C), pages 1249-1268.
    8. Kruger, Wikus & Nygaard, Ivan & Kitzing, Lena, 2021. "Counteracting market concentration in renewable energy auctions: Lessons learned from South Africa," Energy Policy, Elsevier, vol. 148(PB).
    9. Boute, Anatole, 2020. "Regulatory stability and renewable energy investment: The case of Kazakhstan," Renewable and Sustainable Energy Reviews, Elsevier, vol. 121(C).
    10. Mac Clay, Pablo & Börner, Jan & Sellare, Jorge, 2023. "Institutional and macroeconomic stability mediate the effect of auctions on renewable energy capacity," Energy Policy, Elsevier, vol. 180(C).
    11. Barnea, Gil & Hagemann, Christian & Wurster, Stefan, 2022. "Policy instruments matter: Support schemes for renewable energy capacity in worldwide comparison," Energy Policy, Elsevier, vol. 168(C).
    12. Cassetta, Ernesto & Monarca, Umberto & Nava, Consuelo Rubina & Meleo, Linda, 2017. "Is the answer blowin' in the wind (auctions)? An assessment of the Italian support scheme," Energy Policy, Elsevier, vol. 110(C), pages 662-674.
    13. Martin, Nigel J. & Rice, John L., 2012. "Developing renewable energy supply in Queensland, Australia: A study of the barriers, targets, policies and actions," Renewable Energy, Elsevier, vol. 44(C), pages 119-127.
    14. Batz Liñeiro, Taimyra & Müsgens, Felix, 2021. "Evaluating the German PV auction program: The secrets of individual bids revealed," Energy Policy, Elsevier, vol. 159(C).
    15. Diniz, Bruno Andrade & Szklo, Alexandre & Tolmasquim, Maurício T. & Schaeffer, Roberto, 2023. "Delays in the construction of power plants from electricity auctions in Brazil," Energy Policy, Elsevier, vol. 175(C).
    16. Tu, Qiang & Mo, Jianlei & Betz, Regina & Cui, Lianbiao & Fan, Ying & Liu, Yu, 2020. "Achieving grid parity of solar PV power in China- The role of Tradable Green Certificate," Energy Policy, Elsevier, vol. 144(C).
    17. Alcorta, Peio & Espinosa, Maria Paz & Pizarro-Irizar, Cristina, 2023. "Who bears the risk? Incentives for renewable electricity under strategic interaction between regulator and investors," Resource and Energy Economics, Elsevier, vol. 75(C).
    18. Enikő Kácsor, 2021. "Modelling Bidding Behaviour on German Photovoltaic Auctions," Energies, MDPI, vol. 14(2), pages 1-32, January.
    19. Izabela Godyń & Anna Dubel, 2021. "Evolution of Hydropower Support Schemes in Poland and Their Assessment Using the LCOE Method," Energies, MDPI, vol. 14(24), pages 1-23, December.
    20. Andreas Voss and Reinhard Madlener, 2017. "Auction Schemes, Bidding Strategies and the Cost-Optimal Level of Promoting Renewable Electricity in Germany," The Energy Journal, International Association for Energy Economics, vol. 0(KAPSARC S).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:148:y:2021:i:pa:s0301421520306443. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/enpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.