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Free keywords:
Auction design, Energy policy, Renewable electricity, Renewable energy auction, Technology diversity
Abstract:
Multi-technology auctions are a popular instrument to support renewable electricity in the European Union. While they increase competition, some technologies could dominate, which might be an issue for some countries’ power system reliability. Using statistical methods, I analyse how balanced or skewed European multi-technology auctions are and investigate driving factors. I show that 80% of all multi-technology auction rounds from 2011 to 2020 were skewed, strongly or exclusively favouring one technology. None of the investigated design elements and general context factors can explain this. Instead, specific auction-external context factors may better explain the observed skewness. Furthermore, the aggregated outcome across all rounds, years, and countries is relatively balanced because the rounds are differently skewed. This could be coincidental and change in the future if outcomes remain strongly skewed. Policymakers may consider shifting to technology-specific auctions that target single technologies, particularly if they cannot manage the risks of skewed auction outcomes. Thereby, they promote a diverse and targeted deployment of renewables.
