“We call an auction volume or ceiling price that depends on the level of competition endogenously determined. Because both decrease with a decreasing level of competition, we speak of endogenous rationing. The rationale behind endogenous rationing, by sometimes referred to as the 80% rule, first appears to be rather intuitive. In times of low competition, policy makers must choose between low prices and high auction volumes. To guarantee both low prices and high volumes, they want to artificially create competition.

This policy brief explains why the approach of endogenous adaption mechanisms should not be followed and is hindering renewable energy expansion. We propose other options to meet the problems emerging from low supply and low competition in auctions”.

Download the policy brief here.