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Policy and Theoretical Implications of the Zero-subsidy Bids in the German Offshore Wind Tenders

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  • Thomas Greve
  • Marta Rocha

Abstract

The German offshore wind tender, launched in April 2017, resulted in three out of the four winning projects being delivered with zero subsidies, relying only on the wholesale price. This result has been regarded as a turning point for the industry. This paper analyses the 2017/18 German offshore wind tenders and the bidding strategies of the winning developers. We then propose a re-design of the tenders with the aim of achieving optimality/zero-subsidies and efficiency - two key properties in mechanism design. The paper contributes to the discussion on how to design offshore wind tenders with both a policy and theoretical perspective. This is of particular relevance given the rapid expansion of this type of investment in Europe and the use of auctions to select developers.

Suggested Citation

  • Thomas Greve & Marta Rocha, 2020. "Policy and Theoretical Implications of the Zero-subsidy Bids in the German Offshore Wind Tenders," The Energy Journal, , vol. 41(4), pages 89-104, July.
    • Handle: RePEc:sae:enejou:v:41:y:2020:i:4:p:89-104
    DOI: 10.5547/01956574.41.4.tgre
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    References listed on IDEAS

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    1. Michael H. Rothkopf, 2007. "Thirteen Reasons Why the Vickrey-Clarke-Groves Process Is Not Practical," Operations Research, INFORMS, vol. 55(2), pages 191-197, April.
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    Cited by:

    1. Newbery, David M., 2023. "High renewable electricity penetration: Marginal curtailment and market failure under “subsidy-free” entry," Energy Economics, Elsevier, vol. 126(C).
    2. Wiegner, J.F. & Andreasson, L.M. & Kusters, J.E.H. & Nienhuis, R.M., 2024. "Interdisciplinary perspectives on offshore energy system integration in the North Sea: A systematic literature review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 189(PA).
    3. Newbery, David, 2021. "National Energy and Climate Plans for the island of Ireland: wind curtailment, interconnectors and storage," Energy Policy, Elsevier, vol. 158(C).
    4. Wei, Youzhou & Zou, Qing-Ping & Lin, Xianghong, 2021. "Evolution of price policy for offshore wind energy in China: Trilemma of capacity, price and subsidy," Renewable and Sustainable Energy Reviews, Elsevier, vol. 136(C).

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    More about this item

    Keywords

    Energy; Policy; Mechanism design; Optimality; Efficiency;
    All these keywords.

    JEL classification:

    • F0 - International Economics - - General

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