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The bidding strategy for renewable energy auctions under government subsidies

Author

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  • Wang, Zhen
  • Lam, Jasmine Siu Lee
  • Huo, Jiazhen

Abstract

Investing in renewable energy is the inevitable path to achieving energy transition. To promote renewable energy investment, many countries have subsidized renewable energy generation alongside auction mechanisms. The bidding strategy for renewable energy auctions under different forms of government subsidies is not well studied. Based on the constructed preemption game model, this paper studies the bidding strategy for renewable energy auctions under government subsidies and further discusses the impact of different subsidy forms on the investor's bidding strategy. Our results demonstrate that with incomplete information on competitors' investment income or investment cost, an investor can refer to the bidding strategy without competitors to guide decisions. In addition, the higher the government subsidy, the lower the bidding price of the investor. In the fixed amount subsidy form, the most critical factor influencing the bidding strategy is the annual power production after the project investment.

Suggested Citation

  • Wang, Zhen & Lam, Jasmine Siu Lee & Huo, Jiazhen, 2024. "The bidding strategy for renewable energy auctions under government subsidies," Applied Energy, Elsevier, vol. 353(PB).
    • Handle: RePEc:eee:appene:v:353:y:2024:i:pb:s030626192301512x
    DOI: 10.1016/j.apenergy.2023.122148
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