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How to design efficient renewable energy auctions? Empirical insights from Europe

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  • Anatolitis, Vasilios
  • Azanbayev, Alina
  • Fleck, Ann-Katrin

Abstract

An increasing number of countries use auctions to allocate support for renewable energies. One major objective of policymakers when designing auctions is support cost efficiency, i.e., achieving low awarded prices. Based on a holistic database with auction outcomes from Europe covering the years 2012–2020, we conduct a fixed effects panel data regression to assess the effects of several auction design elements on the awarded prices. According to our results, policymakers aiming for low prices in renewable energy auctions should avoid restricting auctions to small-scale projects, implement ceiling prices, and ensure high levels of competition. Multi-technology auctions can also lead to higher efficiency, while quotas should be avoided. While PV tends to achieve lower prices in auctions restricted to small-scale projects, onshore wind performs better in auctions open to large-scale projects. Feed-in premia, multi-criteria auctions and allowing bidders to deviate from their awarded project capacity show no significant impact. The introduction of financial prequalification requirements and the length of the realisation period should be chosen carefully, as their effects are interrelated. While our results for individual design elements are largely in line with existing literature, we are able to produce new insights on the interdependencies between various auction design elements.

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  • 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).
    • Handle: RePEc:eee:enepol:v:166:y:2022:i:c:s0301421522002075
    DOI: 10.1016/j.enpol.2022.112982
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    3. Buschle, Julius & Anatolitis, Vasilios & Plötz, Patrick, 2024. "Empirical evidence on discrimination in multi-technology renewable energy auctions in Europe," Energy Policy, Elsevier, vol. 184(C).
    4. Diallo, Alfa & Kitzing, Lena, 2024. "Selection bias in multi-technology auctions: How to quantify and assess efficiency implications in renewable energy auctions," Energy Policy, Elsevier, vol. 184(C).
    5. 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).
    6. Matteo Troncia & José Pablo Chaves Ávila & Carlos Damas Silva & Helena Gerard & Gwen Willeghems, 2023. "Market-Based TSO–DSO Coordination: A Comprehensive Theoretical Market Framework and Lessons from Real-World Implementations," Energies, MDPI, vol. 16(19), pages 1-28, October.
    7. 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).
    8. Hugo Algarvio, 2023. "The Economic Sustainability of Variable Renewable Energy Considering the Negotiation of Different Support Schemes," Sustainability, MDPI, vol. 15(5), pages 1-21, March.
    9. Blanka Tundys & Agnieszka Bretyn, 2023. "Energy Transition Scenarios for Energy Poverty Alleviation: Analysis of the Delphi Study," Energies, MDPI, vol. 16(4), pages 1-20, February.
    10. Tiedemann, Silvana & Müller-Hansen, Finn, 2023. "Auctions to phase out coal power: Lessons learned from Germany," Energy Policy, Elsevier, vol. 174(C).
    11. Ehrhart, Karl-Martin & Ott, Marion & Seifert, Stefan & Wang, Runxi, 2024. "Combinatorial auctions for renewable energy — potentials and challenges," Energy Policy, Elsevier, vol. 186(C).
    12. Diana Enescu & Alessandro Ciocia & Udayanga I. K. Galappaththi & Harsha Wickramasinghe & Francesco Alagna & Angela Amato & Francisco Díaz-González & Filippo Spertino & Valeria Cocina, 2023. "Energy Tariff Policies for Renewable Energy Development: Comparison between Selected European Countries and Sri Lanka," Energies, MDPI, vol. 16(4), pages 1-26, February.
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    14. Pedro Meirelles Villas-Bôas & José Maria Ferreira Jardim da Silveira & Fernando Rocha Villas-Bôas, 2023. "Stakeholder Perspectives on Energy Auctions: A Case Study in Roraima, Brazil," Energies, MDPI, vol. 16(14), pages 1-19, July.

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