Experiences with auctions for renewable energy support

Mora, David; Islam, Marco; Soysal, Emilie Rosenlund; Kitzing, Lena; Blanco, Ana Lucia Amazo; Förster, Sonja; Tiedemann, Silvana; Wigand, Fabian

doi:10.1109/eem.2017.7981922

Cited by 11 publications

(12 citation statements)

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“…After reviewing other sources of additional incomes not reflected in the bid price, there remains the possibility of strategic or speculative underbidding for obtaining market power undermining other players [18,39] or securing grid connection [7], even renouncing normal financial returns [36]. Underbidding may also be due to not reliable estimations of the financial and technical capabilities to undertake the project development [33].…”

Section: Analysis Of Auction Prices and Lcoe Comparison Resultsmentioning

confidence: 99%

Renewable Energy Auction Prices: Near Subsidy-Free?

et al. 2020

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The latest trend of low record bid prices in renewable energy auctions has raised concerns on the effective deployment of the winning projects. A survey of recent auction data from several countries, technologies and remuneration designs is analysed and compared with the corresponding levelised costs of energy (LCOEs) to draw first insights on their viability. A critical assessment of the ability of the LCOE for determining the adequate bid level is then performed and the preliminary unviable results of selected mature technologies are further investigated using improved profitability metrics as the project and equity net present value (NPV) and internal rate of return (IRR). As representative examples, the analysed Danish 2019 onshore wind and photovoltaics (PV) auctions require very specific scenarios to become viable, which cast doubts on their effective implementation. Under the assumptions of a realistic base case, the sensitivity analysis revealed that either 59% of decrease in the weighted average cost of capital (WACC), or 37% of discount on the investment cost or a 3.6% annual increment in the mean market price is needed for achieving the NPV break-even in the onshore wind case. Likewise, the PV case is unprofitable whatever the WACC may be, and either a 60% discount on the investment cost or a 6.8% annual increment in the mean market price is needed for the NPV to break-even. Although some projects could be relying on indirect revenues or additional sources of incomes beyond the auction support, it remains to see if they are finally materialised.

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Section: Analysis Of Auction Prices and Lcoe Comparison Resultsmentioning

confidence: 99%

Renewable Energy Auction Prices: Near Subsidy-Free?

et al. 2020

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“…This system allows for more efficient expansion of capacity. The regulatory body establishes the quantity, and project developers use a bidding system to determine viability (Bichler et al, 2020;Yalili et al, 2020;Mora et al, 2017;del Rio and Linares, 2014;IRENA, 2013). This process is considered a flexible one, and policymakers must adopt it considering a country's specific circumstances to achieve renewable energy volume targets.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Botta (2019) suggests that auction design features can lead to prudent improvements in financing costs by lowering the cost of equity by between 0.5% and 1.5%. The auction system has the potential to reduce compensation and avoid overcompensation, but it must be designed and implemented correctly (Bichler et al, 2020;Mora et al, 2017;del Rio and Linares, 2014). This view is supported by AURES II (2020) in achieving the robust deployment of renewable energy and meeting climate targets.…”

Section: Literature Reviewmentioning

confidence: 99%

PRACTICING OF RENEWABLE ENERGY AUCTION SCHEME — EXPECTED SOCIETAL & ECONOMIC GAINS FOR THE DEVELOPING COUNTRIES

ALAM SHAHI

2023

AUOES

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With the devastating impacts of climate change, it is evident that many polls show a shift in power generation from fossil fuels to renewable energy. To support this transition, flexible and adaptable support mechanisms are required to maintain a stable and attractive environment for investments in the renewable energy sector, while ensuring the reliability and sustainability of the energy system in an economical way. Auctions have gained momentum as a dominant strategy, either solely or in collaboration with supplementary trials, to provide incentives for renewable energy deployment. The auction mechanism has expanded widely, with only six states accepting Renewable Energy Sources (RES) auction in 2005, and at least 84 states adopting this tool by 2017. This study aims to explore the potential of the auction mechanism in promoting renewable energy in the developing countries like Bangladesh, which has yet to add the required capacity to its energy mix due to the lack of a suitable support scheme to achieve its carbon neutrality goal. The research outlines the opportunity to design auctions based on qualitative research along with levelised cost of electricity (LCOE) model as quantitative part, the impact of auctions on energy costs and thus the feasibility of suggested auctioning schemes based on country-specific empirical evidence and benefits to develop an auctioning model for the countries. The potential auction model will add further positive value to the society as well as the both local and national economy. The results indicate that a systematic auctioning scheme with socio-economic development instruments, under a qualification requirement, can ensure various benefits for an emerging state with renewable energy resources.

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“…With little prior experience, there would be an initial consideration of the actual costs in Myanmar. For example, the price levels achieved through energy auctions can vary depending on their design elements [84][85][86][87][88][89].…”

Section: Decreasing Global Prices Of Solar Energy (O3)mentioning

confidence: 99%

A SWOT Analysis of Utility-Scale Solar in Myanmar

Alvarez

Sugiyama

2020

Energies

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Myanmar remains one of the few exceptions to the rapid diffusion of solar photovoltaics (PV) in power generation mixes. This is surprising considering that Myanmar is one of the countries with the largest technical potential for solar energy among Southeast Asian nations. Solar energy can complement the existing hydropower generation to address endemic energy crisis during the dry season. A continuation of paralysis on investments in solar energy could affect the security and sustainability of the sector in one of the most rapidly growing countries in the region. In this paper, we aimed to identify the barriers preventing solar energy to flourish in Myanmar and to identify policy options to unlock them. We conducted a SWOT (strengths, weaknesses, opportunities, and threats) analysis with inputs from relevant stakeholders from the government, private sector, and civil society organizations. Our analysis suggested a consensus on the merits of solar energy among all factors; however, a policy framework to spur investments that contribute both to the national energy system and local development needs to be developed by considering some particularities of Myanmar, such as securing rightful land ownership and limited experience with market mechanisms (e.g., energy auction), for the promotion of investments in the energy sector.

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Experiences with auctions for renewable energy support

Cited by 11 publications

References 0 publications

Renewable Energy Auction Prices: Near Subsidy-Free?

Renewable Energy Auction Prices: Near Subsidy-Free?

PRACTICING OF RENEWABLE ENERGY AUCTION SCHEME — EXPECTED SOCIETAL & ECONOMIC GAINS FOR THE DEVELOPING COUNTRIES

A SWOT Analysis of Utility-Scale Solar in Myanmar

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