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The large-scale solar feed-in tariff reverse auction in the Australian Capital Territory, Australia

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  • Buckman, Greg
  • Sibley, Jon
  • Bourne, Richard

Abstract

Feed-in tariffs (FiTs) offer renewable energy developers significant investor certainty but sometimes at the cost of being misaligned with generation costs. Reverse FiT auctions, where the FiT rights for a predetermined capacity are auctioned, can overcome this problem but can be plagued by non-delivery risks, particularly of competitively priced proposals. In 2012 and 2013 the Australian Capital Territory (ACT) Government in Australia conducted a FiT reverse auction for 40MW of large-scale solar generating capacity, the first such auction undertaken in the country. The auction was highly competitive in relation to price and demonstrating low delivery risks. Proposal capital costs, particularly engineering, procurement and construction costs, as well as internal rates of return, were lower than expected. The auction process revealed limited land availability for large-scale solar developments in the ACT as well as a significant perceived sovereign risk issue. The auction process was designed to mitigate non-delivery risk by requiring proposals to be pre-qualified on the basis of delivery risk, before considering FiT pricing. The scheme is likely to be used by the ACT Government to support further large-scale renewable energy development as part of its greenhouse gas reduction strategy which is underpinned by a 90-per cent-by-2020 renewable energy target.

Suggested Citation

  • Buckman, Greg & Sibley, Jon & Bourne, Richard, 2014. "The large-scale solar feed-in tariff reverse auction in the Australian Capital Territory, Australia," Energy Policy, Elsevier, vol. 72(C), pages 14-22.
    • Handle: RePEc:eee:enepol:v:72:y:2014:i:c:p:14-22
    DOI: 10.1016/j.enpol.2014.04.007
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    Cited by:

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    3. Malte Gephart & Corinna Klessmann & Fabian Wigand, 2017. "Renewable energy auctions – When are they (cost-)effective?," Energy & Environment, , vol. 28(1-2), pages 145-165, March.
    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).
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    6. Howard, Bahareh Sara & Hamilton, Nicholas E. & Diesendorf, Mark & Wiedmann, Thomas, 2018. "Modeling the carbon budget of the Australian electricity sector's transition to renewable energy," Renewable Energy, Elsevier, vol. 125(C), pages 712-728.
    7. Best, Rohan, 2023. "Equitable reverse auctions supporting household energy investments," Energy Policy, Elsevier, vol. 177(C).
    8. Buckman, Greg & Sibley, Jon & Ward, Megan, 2019. "The large-scale feed-in tariff reverse auction scheme in the Australian Capital Territory 2012, to 2016," Renewable Energy, Elsevier, vol. 132(C), pages 176-185.
    9. Martin, Nigel & Rice, John, 2015. "Improving Australia's renewable energy project policy and planning: A multiple stakeholder analysis," Energy Policy, Elsevier, vol. 84(C), pages 128-141.
    10. 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.
    11. Ramli, Makbul A.M. & Twaha, Ssennoga, 2015. "Analysis of renewable energy feed-in tariffs in selected regions of the globe: Lessons for Saudi Arabia," Renewable and Sustainable Energy Reviews, Elsevier, vol. 45(C), pages 649-661.
    12. White, Lee V. & Hughes, Llewelyn & Lyons, Chell & Peng, Yuan, 2021. "Iterating localisation policies in support of energy transition: The case of the Australian Capital Territory," Energy Policy, Elsevier, vol. 158(C).
    13. Martin, Nigel & Rice, John, 2021. "Power outages, climate events and renewable energy: Reviewing energy storage policy and regulatory options for Australia," Renewable and Sustainable Energy Reviews, Elsevier, vol. 137(C).
    14. Elizondo Azuela, Gabriela & Barroso, Luiz & Khanna, Ashish & Wang, Xiaodong & Wu, Yun & Cunha, Gabriel, 2014. "Performance of renewable energy auctions : experience in Brazil, China and India," Policy Research Working Paper Series 7062, The World Bank.
    15. Diaz-Rainey, Ivan & Sise, Greg, 2018. "Green Energy Finance in Australia and New Zealand," ADBI Working Papers 840, Asian Development Bank Institute.
    16. Paulo Henrique de Mello Santana, 2015. "Cost-effectiveness as Energy Policy Mechanisms: The Paradox of Technology-neutral and Technology-specific Policies in the Short and Long Term," Working Papers Working Paper 2015-02, Regional Research Institute, West Virginia University.
    17. de Mello Santana, Paulo Henrique, 2016. "Cost-effectiveness as energy policy mechanisms: The paradox of technology-neutral and technology-specific policies in the short and long term," Renewable and Sustainable Energy Reviews, Elsevier, vol. 58(C), pages 1216-1222.

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