IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v72y2014icp14-22.html
   My bibliography  Save this article

The large-scale solar feed-in tariff reverse auction in the Australian Capital Territory, Australia

Author

Listed:
  • Buckman, Greg
  • Sibley, Jon
  • Bourne, Richard

Abstract

Feed-in tariffs (FiTs) offer renewable energy developers significant investor certainty but sometimes at the cost of being misaligned with generation costs. Reverse FiT auctions, where the FiT rights for a predetermined capacity are auctioned, can overcome this problem but can be plagued by non-delivery risks, particularly of competitively priced proposals. In 2012 and 2013 the Australian Capital Territory (ACT) Government in Australia conducted a FiT reverse auction for 40MW of large-scale solar generating capacity, the first such auction undertaken in the country. The auction was highly competitive in relation to price and demonstrating low delivery risks. Proposal capital costs, particularly engineering, procurement and construction costs, as well as internal rates of return, were lower than expected. The auction process revealed limited land availability for large-scale solar developments in the ACT as well as a significant perceived sovereign risk issue. The auction process was designed to mitigate non-delivery risk by requiring proposals to be pre-qualified on the basis of delivery risk, before considering FiT pricing. The scheme is likely to be used by the ACT Government to support further large-scale renewable energy development as part of its greenhouse gas reduction strategy which is underpinned by a 90-per cent-by-2020 renewable energy target.

Suggested Citation

  • Buckman, Greg & Sibley, Jon & Bourne, Richard, 2014. "The large-scale solar feed-in tariff reverse auction in the Australian Capital Territory, Australia," Energy Policy, Elsevier, vol. 72(C), pages 14-22.
    • Handle: RePEc:eee:enepol:v:72:y:2014:i:c:p:14-22
    DOI: 10.1016/j.enpol.2014.04.007
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301421514002183
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.enpol.2014.04.007?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Frondel, Manuel & Ritter, Nolan & Schmidt, Christoph M. & Vance, Colin, 2010. "Economic impacts from the promotion of renewable energy technologies: The German experience," Energy Policy, Elsevier, vol. 38(8), pages 4048-4056, August.
    2. Kent, Anthony & Mercer, David, 2006. "Australia's mandatory renewable energy target (MRET): an assessment," Energy Policy, Elsevier, vol. 34(9), pages 1046-1062, June.
    3. Butler, Lucy & Neuhoff, Karsten, 2008. "Comparison of feed-in tariff, quota and auction mechanisms to support wind power development," Renewable Energy, Elsevier, vol. 33(8), pages 1854-1867.
    4. Eyre, Nick, 2013. "Energy saving in energy market reform—The feed-in tariffs option," Energy Policy, Elsevier, vol. 52(C), pages 190-198.
    5. Jenner, Steffen & Groba, Felix & Indvik, Joe, 2013. "Assessing the strength and effectiveness of renewable electricity feed-in tariffs in European Union countries," Energy Policy, Elsevier, vol. 52(C), pages 385-401.
    6. Liu, Yingqi & Kokko, Ari, 2010. "Wind power in China: Policy and development challenges," Energy Policy, Elsevier, vol. 38(10), pages 5520-5529, October.
    7. Yatchew, Adonis & Baziliauskas, Andy, 2011. "Ontario feed-in-tariff programs," Energy Policy, Elsevier, vol. 39(7), pages 3885-3893, July.
    8. Martin, Nigel & Rice, John, 2013. "The solar photovoltaic feed-in tariff scheme in New South Wales, Australia," Energy Policy, Elsevier, vol. 61(C), pages 697-706.
    9. Couture, Toby & Gagnon, Yves, 2010. "An analysis of feed-in tariff remuneration models: Implications for renewable energy investment," Energy Policy, Elsevier, vol. 38(2), pages 955-965, February.
    10. Doherty, Ronan & O'Malley, Mark, 2011. "The efficiency of Ireland's Renewable Energy Feed-In Tariff (REFIT) for wind generation," Energy Policy, Elsevier, vol. 39(9), pages 4911-4919, September.
    11. Nelson, Tim & Nelson, James & Ariyaratnam, Jude & Camroux, Simon, 2013. "An analysis of Australia's large scale renewable energy target: Restoring market confidence," Energy Policy, Elsevier, vol. 62(C), pages 386-400.
    12. Buckman, Greg & Diesendorf, Mark, 2010. "Addendum to "Design limitations in Australian renewable electricity policies" [Energy Policy 38 (2010), 3365-3376]," Energy Policy, Elsevier, vol. 38(11), pages 7539-7540, November.
    13. Elliston, Ben & Diesendorf, Mark & MacGill, Iain, 2012. "Simulations of scenarios with 100% renewable electricity in the Australian National Electricity Market," Energy Policy, Elsevier, vol. 45(C), pages 606-613.
    14. Stokes, Leah C., 2013. "The politics of renewable energy policies: The case of feed-in tariffs in Ontario, Canada," Energy Policy, Elsevier, vol. 56(C), pages 490-500.
    15. Garnaut,Ross, 2008. "The Garnaut Climate Change Review," Cambridge Books, Cambridge University Press, number 9780521744447.
    16. Drechsler, Martin & Meyerhoff, Jürgen & Ohl, Cornelia, 2012. "The effect of feed-in tariffs on the production cost and the landscape externalities of wind power generation in West Saxony, Germany," Energy Policy, Elsevier, vol. 48(C), pages 730-736.
    17. Mitchell, Catherine & Connor, Peter, 2004. "Renewable energy policy in the UK 1990-2003," Energy Policy, Elsevier, vol. 32(17), pages 1935-1947, November.
    18. del Rio, Pablo & Gual, Miguel A., 2007. "An integrated assessment of the feed-in tariff system in Spain," Energy Policy, Elsevier, vol. 35(2), pages 994-1012, February.
    19. Mitchell, C. & Bauknecht, D. & Connor, P.M., 2006. "Effectiveness through risk reduction: a comparison of the renewable obligation in England and Wales and the feed-in system in Germany," Energy Policy, Elsevier, vol. 34(3), pages 297-305, February.
    20. Dong, C.G., 2012. "Feed-in tariff vs. renewable portfolio standard: An empirical test of their relative effectiveness in promoting wind capacity development," Energy Policy, Elsevier, vol. 42(C), pages 476-485.
    21. Kim, Kyoung-Kuk & Lee, Chi-Guhn, 2012. "Evaluation and optimization of feed-in tariffs," Energy Policy, Elsevier, vol. 49(C), pages 192-203.
    22. AfDB AfDB, . "Annual Report 2012," Annual Report, African Development Bank, number 461.
    23. Mitchell, Catherine, 1995. "The renewables NFFO: A review," Energy Policy, Elsevier, vol. 23(12), pages 1077-1091, December.
    24. William E., Lilley & Luke J., Reedman & Liam D., Wagner & Colin F., Alie & Anthony R., Szatow, 2012. "An economic evaluation of the potential for distributed energy in Australia," Energy Policy, Elsevier, vol. 51(C), pages 277-289.
    25. Buckman, Greg & Diesendorf, Mark, 2010. "Design limitations in Australian renewable electricity policies," Energy Policy, Elsevier, vol. 38(7), pages 3365-3376, July.
    26. Gabriela Elizondo Azuela & Luiz Augusto Barroso, 2012. "Design and Performance of Policy Instruments to Promote the Development of Renewable Energy : Emerging Experience in Selected Developing Countries," World Bank Publications - Books, The World Bank Group, number 9379, December.
    27. Lesser, Jonathan A. & Su, Xuejuan, 2008. "Design of an economically efficient feed-in tariff structure for renewable energy development," Energy Policy, Elsevier, vol. 36(3), pages 981-990, March.
    28. Leepa, Claudia & Unfried, Matthias, 2013. "Effects of a cut-off in feed-in tariffs on photovoltaic capacity: Evidence fromGermany," Energy Policy, Elsevier, vol. 56(C), pages 536-542.
    29. Muhammad-Sukki, Firdaus & Ramirez-Iniguez, Roberto & Munir, Abu Bakar & Mohd Yasin, Siti Hajar & Abu-Bakar, Siti Hawa & McMeekin, Scott G. & Stewart, Brian G., 2013. "Revised feed-in tariff for solar photovoltaic in the United Kingdom: A cloudy future ahead?," Energy Policy, Elsevier, vol. 52(C), pages 832-838.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Martin, Nigel & Rice, John, 2021. "Power outages, climate events and renewable energy: Reviewing energy storage policy and regulatory options for Australia," Renewable and Sustainable Energy Reviews, Elsevier, vol. 137(C).
    2. Matthäus, David, 2020. "Designing effective auctions for renewable energy support," Energy Policy, Elsevier, vol. 142(C).
    3. Buckman, Greg & Sibley, Jon & Ward, Megan, 2019. "The large-scale feed-in tariff reverse auction scheme in the Australian Capital Territory 2012, to 2016," Renewable Energy, Elsevier, vol. 132(C), pages 176-185.
    4. Elizondo Azuela, Gabriela & Barroso, Luiz & Khanna, Ashish & Wang, Xiaodong & Wu, Yun & Cunha, Gabriel, 2014. "Performance of renewable energy auctions : experience in Brazil, China and India," Policy Research Working Paper Series 7062, The World Bank.
    5. Andreas Voss and Reinhard Madlener, 2017. "Auction Schemes, Bidding Strategies and the Cost-Optimal Level of Promoting Renewable Electricity in Germany," The Energy Journal, International Association for Energy Economics, vol. 0(KAPSARC S).
    6. Martin, Nigel & Rice, John, 2015. "Improving Australia's renewable energy project policy and planning: A multiple stakeholder analysis," Energy Policy, Elsevier, vol. 84(C), pages 128-141.
    7. Diaz-Rainey, Ivan & Sise, Greg, 2018. "Green Energy Finance in Australia and New Zealand," ADBI Working Papers 840, Asian Development Bank Institute.
    8. Paulo Henrique de Mello Santana, 2015. "Cost-effectiveness as Energy Policy Mechanisms: The Paradox of Technology-neutral and Technology-specific Policies in the Short and Long Term," Working Papers Working Paper 2015-02, Regional Research Institute, West Virginia University.
    9. Burtt, D. & Dargusch, P., 2015. "The cost-effectiveness of household photovoltaic systems in reducing greenhouse gas emissions in Australia: Linking subsidies with emission reductions," Applied Energy, Elsevier, vol. 148(C), pages 439-448.
    10. Winkler, Jenny & Magosch, Magdalena & Ragwitz, Mario, 2018. "Effectiveness and efficiency of auctions for supporting renewable electricity – What can we learn from recent experiences?," Renewable Energy, Elsevier, vol. 119(C), pages 473-489.
    11. Ramli, Makbul A.M. & Twaha, Ssennoga, 2015. "Analysis of renewable energy feed-in tariffs in selected regions of the globe: Lessons for Saudi Arabia," Renewable and Sustainable Energy Reviews, Elsevier, vol. 45(C), pages 649-661.
    12. Howard, Bahareh Sara & Hamilton, Nicholas E. & Diesendorf, Mark & Wiedmann, Thomas, 2018. "Modeling the carbon budget of the Australian electricity sector's transition to renewable energy," Renewable Energy, Elsevier, vol. 125(C), pages 712-728.
    13. White, Lee V. & Hughes, Llewelyn & Lyons, Chell & Peng, Yuan, 2021. "Iterating localisation policies in support of energy transition: The case of the Australian Capital Territory," Energy Policy, Elsevier, vol. 158(C).
    14. Malte Gephart & Corinna Klessmann & Fabian Wigand, 2017. "Renewable energy auctions – When are they (cost-)effective?," Energy & Environment, , vol. 28(1-2), pages 145-165, March.
    15. de Mello Santana, Paulo Henrique, 2016. "Cost-effectiveness as energy policy mechanisms: The paradox of technology-neutral and technology-specific policies in the short and long term," Renewable and Sustainable Energy Reviews, Elsevier, vol. 58(C), pages 1216-1222.
    16. del Río, Pablo & Kiefer, Christoph P., 2023. "Academic research on renewable electricity auctions: Taking stock and looking forward," Energy Policy, Elsevier, vol. 173(C).
    17. Best, Rohan, 2023. "Equitable reverse auctions supporting household energy investments," Energy Policy, Elsevier, vol. 177(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Buckman, Greg & Sibley, Jon & Ward, Megan, 2019. "The large-scale feed-in tariff reverse auction scheme in the Australian Capital Territory 2012, to 2016," Renewable Energy, Elsevier, vol. 132(C), pages 176-185.
    2. Martin, Nigel J. & Rice, John L., 2017. "Examining the use of concept analysis and mapping software for renewable energy feed-in tariff design," Renewable Energy, Elsevier, vol. 113(C), pages 211-220.
    3. Martin, Nigel & Rice, John, 2013. "The solar photovoltaic feed-in tariff scheme in New South Wales, Australia," Energy Policy, Elsevier, vol. 61(C), pages 697-706.
    4. Shen, Neng & Deng, Rumeng & Liao, Haolan & Shevchuk, Oleksandr, 2020. "Mapping renewable energy subsidy policy research published from 1997 to 2018: A scientometric review," Utilities Policy, Elsevier, vol. 64(C).
    5. del Río, Pablo, 2012. "The dynamic efficiency of feed-in tariffs: The impact of different design elements," Energy Policy, Elsevier, vol. 41(C), pages 139-151.
    6. Pérez de Arce, Miguel & Sauma, Enzo & Contreras, Javier, 2016. "Renewable energy policy performance in reducing CO2 emissions," Energy Economics, Elsevier, vol. 54(C), pages 272-280.
    7. Li, Jinke & Liu, Guy & Shao, Jing, 2020. "Understanding the ROC transfer payment in the renewable obligation with the recycling mechanism in the United Kingdom," Energy Economics, Elsevier, vol. 87(C).
    8. Romano, Antonio A. & Scandurra, Giuseppe & Carfora, Alfonso & Fodor, Mate, 2017. "Renewable investments: The impact of green policies in developing and developed countries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 68(P1), pages 738-747.
    9. del Río, Pablo & Bleda, Mercedes, 2012. "Comparing the innovation effects of support schemes for renewable electricity technologies: A function of innovation approach," Energy Policy, Elsevier, vol. 50(C), pages 272-282.
    10. Polzin, Friedemann & Egli, Florian & Steffen, Bjarne & Schmidt, Tobias S., 2019. "How do policies mobilize private finance for renewable energy?—A systematic review with an investor perspective," Applied Energy, Elsevier, vol. 236(C), pages 1249-1268.
    11. Ahmad, Salman & Tahar, Razman Mat & Muhammad-Sukki, Firdaus & Munir, Abu Bakar & Rahim, Ruzairi Abdul, 2015. "Role of feed-in tariff policy in promoting solar photovoltaic investments in Malaysia: A system dynamics approach," Energy, Elsevier, vol. 84(C), pages 808-815.
    12. Paul Lehmann & Felix Creutzig & Melf-Hinrich Ehlers & Nele Friedrichsen & Clemens Heuson & Lion Hirth & Robert Pietzcker, 2012. "Carbon Lock-Out: Advancing Renewable Energy Policy in Europe," Energies, MDPI, vol. 5(2), pages 1-32, February.
    13. Felix Groba & Barbara Breitschopf, 2013. "Impact of Renewable Energy Policy and Use on Innovation: A Literature Review," Discussion Papers of DIW Berlin 1318, DIW Berlin, German Institute for Economic Research.
    14. Jenner, Steffen & Groba, Felix & Indvik, Joe, 2013. "Assessing the strength and effectiveness of renewable electricity feed-in tariffs in European Union countries," Energy Policy, Elsevier, vol. 52(C), pages 385-401.
    15. Youhyun Lee & Inseok Seo, 2019. "Sustainability of a Policy Instrument: Rethinking the Renewable Portfolio Standard in South Korea," Sustainability, MDPI, vol. 11(11), pages 1-19, May.
    16. Zafirakis, D. & Chalvatzis, K. & Kaldellis, J.K., 2013. "“Socially just” support mechanisms for the promotion of renewable energy sources in Greece," Renewable and Sustainable Energy Reviews, Elsevier, vol. 21(C), pages 478-493.
    17. Antonelli, Marco & Desideri, Umberto, 2014. "The doping effect of Italian feed-in tariffs on the PV market," Energy Policy, Elsevier, vol. 67(C), pages 583-594.
    18. Abolhosseini, Shahrouz & Heshmati, Almas, 2014. "The main support mechanisms to finance renewable energy development," Renewable and Sustainable Energy Reviews, Elsevier, vol. 40(C), pages 876-885.
    19. Ramli, Makbul A.M. & Twaha, Ssennoga, 2015. "Analysis of renewable energy feed-in tariffs in selected regions of the globe: Lessons for Saudi Arabia," Renewable and Sustainable Energy Reviews, Elsevier, vol. 45(C), pages 649-661.
    20. Stokes, Leah C., 2013. "The politics of renewable energy policies: The case of feed-in tariffs in Ontario, Canada," Energy Policy, Elsevier, vol. 56(C), pages 490-500.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:72:y:2014:i:c:p:14-22. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/enpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.