IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v148y2021ipbs0301421520307060.html
   My bibliography  Save this article

Counteracting market concentration in renewable energy auctions: Lessons learned from South Africa

Author

Listed:
  • Kruger, Wikus
  • Nygaard, Ivan
  • Kitzing, Lena

Abstract

Competitive bidding programmes, or auctions, are becoming the dominant method for procuring utility-scale renewable energy generation capacity and have coincided with significant cost reductions of renewable energy (RE) technologies. The use of price in auctions as the main awarding criterion has been criticized for apparently leading to market concentration and dominance in project ownership. We investigate: to what extent South Africa's renewable energy auction programme has contributed to market concentration and dominance; if market concentration and dominance have a negative impact on electricity cost in the auction; and to what extent measures taken to counteract market concentration and dominance have led to improved competition and diversity of project ownership.

Suggested Citation

  • 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).
    • Handle: RePEc:eee:enepol:v:148:y:2021:i:pb:s0301421520307060
    DOI: 10.1016/j.enpol.2020.111995
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301421520307060
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.enpol.2020.111995?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. Matsuo, Tyeler & Schmidt, Tobias S., 2019. "Managing tradeoffs in green industrial policies: The role of renewable energy policy design," World Development, Elsevier, vol. 122(C), pages 11-26.
    2. Stephen A. Rhoades, 1993. "The Herfindahl-Hirschman index," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Mar, pages 188-189.
    3. Stéphane Saussier & Carine Staropoli & Anne Yvrande-Billon, 2009. "Public–Private Agreements, Institutions, and Competition: When Economic Theory Meets Facts," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 35(1), pages 1-18, September.
    4. Hansen, U.E. & Nygaard, I. & Morris, M. & Robbins, G., 2020. "The effects of local content requirements in auction schemes for renewable energy in developing countries: A literature review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 127(C).
    5. Yalılı, Mehmet & Tiryaki, Refik & Gözen, Mustafa, 2020. "Evolution of auction schemes for renewable energy in Turkey: An assessment on the results of different designs," Energy Policy, Elsevier, vol. 145(C).
    6. Lundberg, Liv, 2019. "Auctions for all? Reviewing the German wind power auctions in 2017," Energy Policy, Elsevier, vol. 128(C), pages 449-458.
    7. Antonio Estache & Atsushi Iimi, 2012. "Quality or Price? Evidence from ODA-Financed Public Procurement," Public Finance Review, , vol. 40(4), pages 435-469, July.
    8. Reus, Lorenzo & Munoz, Francisco D. & Moreno, Rodrigo, 2018. "Retail consumers and risk in centralized energy auctions for indexed long-term contracts in Chile," Energy Policy, Elsevier, vol. 114(C), pages 566-577.
    9. Grashof, Katherina, 2019. "Are auctions likely to deter community wind projects? And would this be problematic?," Energy Policy, Elsevier, vol. 125(C), pages 20-32.
    10. 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.
    11. Haufe, Marie-Christin & Ehrhart, Karl-Martin, 2018. "Auctions for renewable energy support – Suitability, design, and first lessons learned," Energy Policy, Elsevier, vol. 121(C), pages 217-224.
    12. del Río, Pablo & Linares, Pedro, 2014. "Back to the future? Rethinking auctions for renewable electricity support," Renewable and Sustainable Energy Reviews, Elsevier, vol. 35(C), pages 42-56.
    13. 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.
    14. 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.
    15. 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.
    16. Marijke Welisch, 2018. "The Importance of Penalties and Pre-qualifications: A Model-based Assessment of the UK Renewables Auction Scheme," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 2).
    17. Grashof, Katherina & Berkhout, Volker & Cernusko, Robert & Pfennig, Maximilian, 2020. "Long on promises, short on delivery? Insights from the first two years of onshore wind auctions in Germany," Energy Policy, Elsevier, vol. 140(C).
    18. 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.
    19. Estache, Antonio & Iimi, Atsushi & Ruzzier, Christian, 2009. "Procurement in infrastructure : what does theory tell us ?," Policy Research Working Paper Series 4994, The World Bank.
    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. del Río, Pablo & Kiefer, Christoph P., 2023. "Academic research on renewable electricity auctions: Taking stock and looking forward," Energy Policy, Elsevier, vol. 173(C).
    2. Geßner, Daniel, 2023. "Performance of Renewable Energy Policies - Evidence from Germany's Transition to Auctions," W.E.P. - Würzburg Economic Papers 105, University of Würzburg, Department of Economics.
    3. Batz Liñeiro, Taimyra & Müsgens, Felix, 2021. "Evaluating the German PV auction program: The secrets of individual bids revealed," Energy Policy, Elsevier, vol. 159(C).
    4. Przemysław Kaszyński & Aleksandra Komorowska & Jacek Kamiński, 2023. "Revisiting Market Power in the Polish Power System," Energies, MDPI, vol. 16(13), pages 1-23, June.
    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. Tiedemann, Silvana & Müller-Hansen, Finn, 2023. "Auctions to phase out coal power: Lessons learned from Germany," Energy Policy, Elsevier, vol. 174(C).
    7. Mike Morris & Glen Robbins & Ulrich Hansen & Ivan Nygard, 2022. "The wind energy global value chain localisation and industrial policy failure in South Africa," Journal of International Business Policy, Palgrave Macmillan, vol. 5(4), pages 490-511, December.
    8. Kiefer, Christoph P. & del Río, Pablo, 2024. "Analysing the impact of renewable energy auctions on market concentration," Renewable Energy, Elsevier, vol. 221(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. del Río, Pablo & Kiefer, Christoph P., 2023. "Academic research on renewable electricity auctions: Taking stock and looking forward," Energy Policy, Elsevier, vol. 173(C).
    2. 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).
    3. 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).
    4. Melliger, Marc, 2023. "Quantifying technology skewness in European multi-technology auctions and the effect of design elements and other driving factors," Energy Policy, Elsevier, vol. 175(C).
    5. Álvarez, Francisco & del Río, Pablo, 2022. "Is small always beautiful? Analyzing the efficiency effects of size heterogeneity in renewable electricity auctions," Energy Economics, Elsevier, vol. 106(C).
    6. Helena Martín & Sergio Coronas & Àlex Alonso & Jordi de la Hoz & José Matas, 2020. "Renewable Energy Auction Prices: Near Subsidy-Free?," Energies, MDPI, vol. 13(13), pages 1-21, July.
    7. Kiefer, Christoph P. & del Río, Pablo, 2024. "Analysing the impact of renewable energy auctions on market concentration," Renewable Energy, Elsevier, vol. 221(C).
    8. Matthäus, David, 2020. "Designing effective auctions for renewable energy support," Energy Policy, Elsevier, vol. 142(C).
    9. Batz Liñeiro, Taimyra & Müsgens, Felix, 2023. "Evaluating the German onshore wind auction programme: An analysis based on individual bids," Energy Policy, Elsevier, vol. 172(C).
    10. 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).
    11. 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).
    12. Halimatussadiah, Alin & Kruger, Wikus & Wagner, Fabian & Afifi, Fachry Abdul Razak & Lufti, Roes Ebara Gikami & Kitzing, Lena, 2024. "The country of perpetual potential: Why is it so difficult to procure renewable energy in Indonesia?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 201(C).
    13. Fleck, Ann-Katrin & Anatolitis, Vasilios, 2023. "Achieving the objectives of renewable energy policy – Insights from renewable energy auction design in Europe," Energy Policy, Elsevier, vol. 173(C).
    14. Daniel del Barrio Alvarez & Masahiro Sugiyama, 2020. "A SWOT Analysis of Utility-Scale Solar in Myanmar," Energies, MDPI, vol. 13(4), pages 1-17, February.
    15. Côté, Elizabeth & Đukan, Mak & Pons-Seres de Brauwer, Cristian & Wüstenhagen, Rolf, 2022. "The price of actor diversity: Measuring project developers’ willingness to accept risks in renewable energy auctions," Energy Policy, Elsevier, vol. 163(C).
    16. Münch, Florian Anselm & Scheifele, Fabian, 2023. "Nurturing national champions? Local content in solar auctions and firm innovation," Energy Policy, Elsevier, vol. 179(C).
    17. 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.
    18. Enikő Kácsor, 2021. "Modelling Bidding Behaviour on German Photovoltaic Auctions," Energies, MDPI, vol. 14(2), pages 1-32, January.
    19. Grashof, Katherina & Berkhout, Volker & Cernusko, Robert & Pfennig, Maximilian, 2020. "Long on promises, short on delivery? Insights from the first two years of onshore wind auctions in Germany," Energy Policy, Elsevier, vol. 140(C).
    20. Sharma, A. & Surana, K. & George, M., 2022. "Do clean energy trade duties generate employment benefits?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 159(C).

    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:pb:s0301421520307060. 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.