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Is the answer blowin' in the wind (auctions)? An assessment of the Italian support scheme

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  • Cassetta, Ernesto
  • Monarca, Umberto
  • Nava, Consuelo Rubina
  • Meleo, Linda

Abstract

This article proposes a quantitative data-based assessment of the onshore wind auctions conducted in Italy from 2012 to 2016. Our objective is to provide new insights in the ongoing debate on policy measures to promote renewable energy sources. Italian wind auction design is examined by firstly investigating its overall outcomes in terms of cost efficiency and policy effectiveness. Determinants affecting awarded tariffs are then empirically analysed further to explore the role of project-related and firm-specific factors as well as different auction design elements. The extreme simplicity of the auction design undoubtedly has promoted competition, encouraging many project developers to bid and reducing support both in static and dynamic terms. Results provide evidence that localisation factors did not constitute a competitive constraint. From a policy perspective, the administratively setting of ceiling prices is a major issue when wind resources are widely available and auctioned capacity is not sufficiently high. While not limiting competition, the effects of pre-qualification criteria on the realisation rate deserve further analysis. However, doubts emerge on the policy effectiveness of the current support scheme which makes difficult to control the total amount of support provided thus likely causing stop-and-go cycles of financing and potentially favouring distorted bidding behaviour.

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  • Cassetta, Ernesto & Monarca, Umberto & Nava, Consuelo Rubina & Meleo, Linda, 2017. "Is the answer blowin' in the wind (auctions)? An assessment of the Italian support scheme," Energy Policy, Elsevier, vol. 110(C), pages 662-674.
  • Handle: RePEc:eee:enepol:v:110:y:2017:i:c:p:662-674
    DOI: 10.1016/j.enpol.2017.08.055
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    3. Kruger, Wikus & Nygaard, Ivan & Kitzing, Lena, 2021. "Counteracting market concentration in renewable energy auctions: Lessons learned from South Africa," Energy Policy, Elsevier, vol. 148(PB).
    4. Anatolitis, Vasilios & Azanbayev, Alina & Fleck, Ann-Katrin, 2022. "How to design efficient renewable energy auctions? Empirical insights from Europe," Energy Policy, Elsevier, vol. 166(C).
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    6. Geßner, Daniel, 2023. "Performance of Renewable Energy Policies - Evidence from Germany's Transition to Auctions," W.E.P. - Würzburg Economic Papers 105, University of Würzburg, Department of Economics.
    7. Bucksteeg, Michael, 2019. "Modelling the impact of geographical diversification of wind turbines on the required firm capacity in Germany," Applied Energy, Elsevier, vol. 235(C), pages 1476-1491.
    8. Cassetta, Ernesto & Nava, Consuelo R. & Zoia, Maria Grazia, 2022. "EU electricity market integration and cross-country convergence in residential and industrial end-user prices," Energy Policy, Elsevier, vol. 165(C).
    9. Vieira, M. & Snyder, B. & Henriques, E. & Reis, L., 2019. "European offshore wind capital cost trends up to 2020," Energy Policy, Elsevier, vol. 129(C), pages 1364-1371.
    10. Grashof, Katherina & Berkhout, Volker & Cernusko, Robert & Pfennig, Maximilian, 2020. "Long on promises, short on delivery? Insights from the first two years of onshore wind auctions in Germany," Energy Policy, Elsevier, vol. 140(C).
    11. Taimyra Batz Li~neiro & Felix Musgens, 2021. "Lessons Learned from Photovoltaic Auctions in Germany," Papers 2104.07536, arXiv.org.
    12. Cassetta, Ernesto & Nava, Consuelo R. & Zoia, Maria Grazia, 2022. "A three-step procedure to investigate the convergence of electricity and natural gas prices in the European Union," Energy Economics, Elsevier, vol. 105(C).
    13. Álvarez, Francisco & del Río, Pablo, 2022. "Is small always beautiful? Analyzing the efficiency effects of size heterogeneity in renewable electricity auctions," Energy Economics, Elsevier, vol. 106(C).
    14. Melliger, Marc, 2023. "Quantifying technology skewness in European multi-technology auctions and the effect of design elements and other driving factors," Energy Policy, Elsevier, vol. 175(C).
    15. Best, Rohan & Chareunsy, Andrea & Li, Han, 2021. "Equity and effectiveness of Australian small-scale solar schemes," Ecological Economics, Elsevier, vol. 180(C).
    16. Helena Martín & Sergio Coronas & Àlex Alonso & Jordi de la Hoz & José Matas, 2020. "Renewable Energy Auction Prices: Near Subsidy-Free?," Energies, MDPI, vol. 13(13), pages 1-21, July.
    17. Batz Liñeiro, Taimyra & Müsgens, Felix, 2021. "Evaluating the German PV auction program: The secrets of individual bids revealed," Energy Policy, Elsevier, vol. 159(C).
    18. del Río, Pablo & Kiefer, Christoph P., 2023. "Academic research on renewable electricity auctions: Taking stock and looking forward," Energy Policy, Elsevier, vol. 173(C).
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    20. Batz Liñeiro, Taimyra & Müsgens, Felix, 2023. "Evaluating the German onshore wind auction programme: An analysis based on individual bids," Energy Policy, Elsevier, vol. 172(C).

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