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Competition, Contracts and Auctions for Renewable Electricity Support: Competition for the Market but not yet in the Market

Author

Listed:
  • Green, R.
  • Newbery, D. M.

Abstract

This article surveys Britain’s groping attempts at delivering adequate volumes of RES at an acceptable system cost, and proposes reforms to support design and transmission charging. Littlechild as the first electricity regulator oversaw the first auctions for renewable electricity contracts. Renewable Obligation certificates added a premium to the market price and accelerated deployment at high cost, until replaced by Contracts for Difference for wind and solar PV, now auctioned. Firm access and locational transmission pricing can work if support is suspended in negative price periods and transmission charges for new entrants are based on marginal expansion costs. The proposed new subsea HVDC links from Scotland would require new windfarms to have capacity f actors of 50% to compete with windfarms in England of 34% capacity factors, while onshore links would deliver at current modest transmission charges.

Suggested Citation

  • Green, R. & Newbery, D. M., 2026. "Competition, Contracts and Auctions for Renewable Electricity Support: Competition for the Market but not yet in the Market," Cambridge Working Papers in Economics 2636, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camdae:2636
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    References listed on IDEAS

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    1. S. C. Littlechild, 1975. "Common Costs, Fixed Charges, Clubs and Games," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 42(1), pages 117-124.
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    Keywords

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    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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