How to design efficient renewable energy auctions? Empirical insights from Europe

• Published in: Energy policy 2022-07, Vol.166, p.112982, Article 112982
• Main Authors: Anatolitis, Vasilios, Azanbayev, Alina, Fleck, Ann-Katrin
• Format: Article
• Language: English
• Subjects: Auction design elements; Auctions; Cost analysis; Design; Efficiency; Energy policy; Multiple criterion; Panel data; Panel data analysis; Photovoltaic cells; Policy making; Prices; Quotas; Renewable energy; Renewable energy auctions; Renewable resources; Support costs; Technology
• ISSN: 0301-4215; 1873-6777
• DOI: 10.1016/j.enpol.2022.112982

An increasing number of countries use auctions to allocate support for renewable energies. One major objective of policymakers when designing auctions is support cost efficiency, i.e., achieving low awarded prices. Based on a holistic database with auction outcomes from Europe covering the years 2012–2020, we conduct a fixed effects panel data regression to assess the effects of several auction design elements on the awarded prices. According to our results, policymakers aiming for low prices in renewable energy auctions should avoid restricting auctions to small-scale projects, implement ceiling prices, and ensure high levels of competition. Multi-technology auctions can also lead to higher efficiency, while quotas should be avoided. While PV tends to achieve lower prices in auctions restricted to small-scale projects, onshore wind performs better in auctions open to large-scale projects. Feed-in premia, multi-criteria auctions and allowing bidders to deviate from their awarded project capacity show no significant impact. The introduction of financial prequalification requirements and the length of the realisation period should be chosen carefully, as their effects are interrelated. While our results for individual design elements are largely in line with existing literature, we are able to produce new insights on the interdependencies between various auction design elements. •Panel data regression on support cost efficiency of renewable energy auctions.•Interaction terms give new insights into effects of auction design elements.•Effects of design elements are mostly in line with existing literature.•Guidance for policy makers on designing efficient renewable energy auctions.