AURES recommendations on the the role of auctions in a new renewable energy directive for the period after 2020 (REDII).
During the work in the AURES project, we have found evidence that auctions can be a suitable instrument for allocating supportJust like administratively set support, auction-allocated su... under budget and volume limitations and can achieve significant short-term efficiency gains, but it has not been proven that auctions in general are better suited to supportJust like administratively set support, auction-allocated su... renewable energy than other supportJust like administratively set support, auction-allocated su... instruments.
The use of auctions entails several new implications that often policy makers have not had to deal with before: ensuring sufficient competition for a well-functioning price formation, avoiding undesired strategic incentives, collusion and other market distortions, and importantly dealing with risk of low realisation rates, e.g. caused by underbiddingIn the context of this project “underbidding” refers to ... or the existence of non-cost barriers.
Because of different market conditions, ongoing institutional learning processes and specific policy goals, we find that auctionAn auction is a market mechanism with the aims of allocating... rules must be adaptable, and should therefore not be too restrictively determined in European level legislation. On the other hand, we find that there is a good case for addressing auctions in the new renewable energy directive (REDII), in order to give guidance to the member states, encourage the application of best practices and help avoiding some of the many pitfalls related to auctionAn auction is a market mechanism with the aims of allocating... design.
For auctions, as with any other instrument, the typical principles of good policy making apply: a strong, long-term policy framework is beneficial, with predictable developments. Retroactive changes should be avoided.
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