The effect of RES auction design on competition: Empirical insight from Europe
No Thumbnail Available
URL
Journal Title
Journal ISSN
Volume Title
School of Business |
Master's thesis
Authors
Date
2024
Department
Major/Subject
Mcode
Degree programme
Economics
Language
en
Pages
46+15
Series
Abstract
The European Union (EU) has set ambitious targets to become climate-neutral by 2050 to prevent climate change. Along with multiple other actions, the EU has set the target for the energy sector to produce over 40 % of the electricity consumption with renewable energy sources (RES) such as onshore wind. These RES projects are still mainly constructed with the financial support of governments and this support is allocated through competitive auctions organized in the Member States. However, a major part of these auctions did not allocate the support as high amount of volume as they had targeted. The reason for this is the lack of submitted capacity in bids by the auction participants. In other words, there has not been enough demand. Hence, this research studies the effects of various auction design elements on the competition level of the auction. More precisely, how different design elements such as ceiling price and penalties affect the competition. I conduct fixed effects panel data regression using data from European RES auctions between 2012 and 2021 to assess the effects of design elements on the competition. The main finding is that favoring larger actors through design elements increases the competition while design elements that favor small-scale actors decrease the competition.Description
Thesis advisor
Liski, MattiKeywords
auction, competition, climate change, renewable energy sources