Is the answer blowin' in the wind (auctions)? An assessment of Italian auction procedures to promote onshore wind energy

This article provides a quantitative data-based assessment of the onshore wind auctions conducted in Italy from 2012 to 2016. More specifically, this paper investigates the policy effectiveness and cost effciency of onshore wind auction schemes and explores the determinants of the incentives granted in accordance with current auction arrangements. Our objective is to provide new insights in the ongoing policy debate on policy measures for the promotion of renewable energy sources (RES). The extreme simplicity of the Italian auction design undoubtedly has promoted competition, encouraging many onshore wind project developers to bid. Our results show that localisation factors did not represent a competitive constraint for project developers. When many sites are available and auctioned capacity is not suffciently high, the administratively setting of ceiling prices becomes a central issue. Doubts also exist on the policy effectiveness of the current support scheme which makes difficult to control the total amount of support provided thus justifying stop-and-go cycles of financing distorted bidding behaviour by project developers and potential favouring.