The role of design elements in instrument mixes: the case of auctions and renewable portfolio standards in South Korea

The success of instruments for the deployment of renewable electricity depends on how those instruments are designed and combined. However, despite the importance of the choice of design elements and the widespread use of instrument mixes, the impact of such choices on the interactions between instruments has not received much attention. This study addresses this gap in the literature and illustrates how the choice of design elements for one instrument may affect the outcome of the instrument mix. It also examines the design elements of auctions in South Korea, where auctions, renewable portfolio standards and feed-in tariffs are combined. The case of South Korea shows that the choice of design elements in an auction may have considerable effects on the instrument mix. The results suggest that, although the need to coordinate instruments for improving the success of instrument mixes has often been proposed, this is not only an issue of coordinating instruments, but also of selecting the appropriate design elements of instruments.