Discriminatory auction design for renewable energy

Arbeitspapier

Designing auctions that favor low resource quality installations allows countries to geographically diversify their renewable energy production, while lowering payments to low-cost producers. In this paper, we develop a stylized model showing that a discriminatory auction design favoring low-wind-yield locations leads to a tradeoff between production costs and producer rent and that the scheme can lower consumer costs even without considering the positive externalities of distributed generation. We explore the influence of the heterogeneity of production costs, the strength of the adjustment, and the regulator's knowledge about cost structures. Through a numerical analysis of the German reference yield model, we estimate that at current auction levels intra-technology discrimination through the reference yield model leads to a reduction of consumer costs of around 24.8 billion Euro or 13% between 2023 and 2030.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: DIW Discussion Papers ; No. 2013

Classification and Topics

• Classification: Wirtschaft ; Auctions ; Alternative Energy Sources ; Energy: Government Policy ; Climate; Natural Disasters and Their Management; Global Warming
• Subject: climate policy ; auctions ; renewable energy ; onshore wind power ; reference yield model

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Kröger, Mats ; Neuhoff, Karsten ; Richstein, Jörn C.
• Event: Veröffentlichung
• (who): Deutsches Institut für Wirtschaftsforschung (DIW)
• (where): Berlin
• (when): 2022

Further information

• Handle: http://hdl.handle.net/10419/263156
• Last update: 10.03.2025, 11:43 AM CET