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Auctions for all? Reviewing the German wind power auctions in 2017

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  • Lundberg, Liv

Abstract

In 2017, Germany introduced auctions to determine the support level for onshore wind power. To protect small-scale actors, citizens’ energy cooperatives were allowed longer realization periods and did not need to have an approval pursuant to the Federal Immission Control Act to submit a bid. Winning cooperatives were given the highest accepted bid, while other participants were paid-as-bid. The aim of this paper is to examine how this auction design affected actor diversity and the risk of winning projects not being realized. Unexpectedly, the outcome of the auctions was that over 90% of the winners were cooperatives, and the average project size of their bids was twice the size of other winning bids. There was also a significant decrease in the highest accepted bid, from 5.78€ct/kWh in the first auction, to 3.82€ct/kWh in the third auction. However, the pricing rule combined with uncertain technology costs and strong competition, may have encouraged overly aggressive bidding. This, as well as cooperatives being exempt from having an approval pursuant to the Federal Immission Control Act, could increase the risk of winning projects not being realized. A conclusion is that special rules for small-scale actors, should be used with caution, especially if they give significant competitive advantages and may affect realization rates.

Suggested Citation

  • Lundberg, Liv, 2019. "Auctions for all? Reviewing the German wind power auctions in 2017," Energy Policy, Elsevier, vol. 128(C), pages 449-458.
    • Handle: RePEc:eee:enepol:v:128:y:2019:i:c:p:449-458
    DOI: 10.1016/j.enpol.2019.01.024
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    7. Dejun Qiu & Hasan Dinçer & Serhat Yüksel & Gözde Gülseven Ubay, 2020. "Multi-Faceted Analysis of Systematic Risk-Based Wind Energy Investment Decisions in E7 Economies Using Modified Hybrid Modeling with IT2 Fuzzy Sets," Energies, MDPI, vol. 13(6), pages 1-25, March.
    8. Sheykhha, Siamak & Borggrefe, Frieder & Madlener, Reinhard, 2022. "Policy implications of spatially differentiated renewable energy promotion: A multi-level scenario analysis of onshore wind auctioning in Germany," Energy Policy, Elsevier, vol. 169(C).
    9. Herbes, Carsten & Rilling, Benedikt & MacDonald, Scott & Boutin, Nathalie & Bigerna, Simona, 2020. "Are voluntary markets effective in replacing state-led support for the expansion of renewables? – A comparative analysis of voluntary green electricity markets in the UK, Germany, France and Italy," Energy Policy, Elsevier, vol. 141(C).
    10. 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).
    11. 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).
    12. Côté, Elizabeth & Đukan, Mak & Pons-Seres de Brauwer, Cristian & Wüstenhagen, Rolf, 2022. "The price of actor diversity: Measuring project developers’ willingness to accept risks in renewable energy auctions," Energy Policy, Elsevier, vol. 163(C).
    13. Karakislak, Irmak & Schneider, Nina, 2023. "The mayor said so? The impact of local political figures and social norms on local responses to wind energy projects," Energy Policy, Elsevier, vol. 176(C).
    14. Reinhard Madlener & Barbara Glensk & Lukas Gläsel, 2019. "Optimal Timing of Onshore Wind Repowering in Germany under Policy Regime Changes: A Real Options Analysis," Energies, MDPI, vol. 12(24), pages 1-33, December.
    15. 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.
    16. Cristian Pons-Seres de Brauwer, 2022. "The Politics of Market Change towards Sustainability: Revisiting Germany’s Policy Support Framework for Renewables," Energies, MDPI, vol. 15(11), pages 1-27, May.
    17. Croonenbroeck, Carsten & Hennecke, David, 2020. "Does the German renewable energy act provide a fair incentive system for onshore wind power? — A simulation analysis," Energy Policy, Elsevier, vol. 144(C).
    18. Davi-Arderius, Daniel & Trujillo-Baute, Elisa & del Río, Pablo, 2023. "Grid investment and subsidy tradeoffs in renewable electricity auctions," Utilities Policy, Elsevier, vol. 84(C).
    19. del Río, Pablo & Kiefer, Christoph P., 2023. "Academic research on renewable electricity auctions: Taking stock and looking forward," Energy Policy, Elsevier, vol. 173(C).
    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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