In renewable energy auctions, providers compete by bidding for contracts to generate energy for buyers. Auctions are considered helpful for reducing renewable energy installation and generation costs. Although less common than single technology auctions, multi-technology auctions (where multiple technologies compete in the same auction) have been in place in Europe for over a decade. There is much debate on whether multi-technology auctions incur techno-economic discrimination effects against certain technologies. Now, Julius Buschle and colleagues from Karlsruhe Institute of Technology and Fraunhofer Institute for Systems and Innovation Research assess potentially discriminatory design elements in multi-technology renewable energy auctions and lend empirical evidence to the debate.
The team take a fractional logit regression approach to assess various auction design elements (largely relating to installation size restrictions, financing, geography, and auction timing). The impact of these elements on solar photovoltaics (PV) and onshore wind in 57 multi-technology renewable energy auctions is considered. The auctions took place in twelve European countries between 2011 and 2021. Results indicate the presence of discriminatory effects in multiple design elements. For instance, minimum size restrictions are favourable for onshore wind projects, while the inverse is the case for solar PV compared to no restrictions. Lower support duration (for example, shorter contracts) for PV could lessen discrimination between the two technologies. While higher bonds (combined and performance) for one technology are deemed detrimental to the other, PV projects are at an advantage if bonds for both are set at a similar range. Neither technology benefits from higher price ceilings. The study opens the door to further work on how to reduce discrimination in renewable energy auctions.
This is a preview of subscription content, access via your institution