The price of actor diversity: Measuring project developers’ willingness to accept risks in renewable energy auctions

Côté, Elizabeth; Đukan, Mak; Brauwer, Cristian Pons-Seres de; Wüstenhagen, Rolf

doi:10.1016/j.enpol.2022.112835

Cited by 22 publications

(6 citation statements)

References 46 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Because it captures preference heterogeneity very well, this approach is regarded as state-ofthe-art for measuring consumer preferences using DCEs [60]. Regression statistics pointed to a reasonably good model fit [61,62], with a Pseudo R-Squared of 0.62 and an average Root Likelihood value of 0.54, which is 2.75 times greater than the null likelihood value of 0.2 (1/5) for completely randomized choices between the five options in every choice set.…”

Section: Data Collection and Analysismentioning

confidence: 99%

Synthetic natural gas in the private heating sector in Germany: match or mismatch between production costs and consumer willingness to pay?

Rilling

2024

Energ Sustain Soc

View full text Add to dashboard Cite

Background The residential heating sector in many European countries requires a fundamental transformation if it is to become climate neutral. Besides the introduction of efficiency measures and updating heating systems, scholars and practitioners consider replacing fossil fuels in existing heating systems a viable approach. Drop-in renewable gases such as biomethane and synthetic natural gas (SNG) cause considerably fewer carbon dioxide (CO2) emissions than natural gas and can be used in natural gas boilers, the dominant heating system in many European countries. To move the ongoing debate around e-fuels forward, this study reports on a Discrete Choice Experiment with 512 respondents in Germany that analyzed consumer preferences and willingness to pay (WTP) for SNG. I build on these insights by comparing WTP to the production costs, making evidence-based decision-making possible. Results The results show that consumers prefer renewable gases over natural gas. Comparing the two types of renewable gases, SNG and biomethane, reveals that consumers clearly favor the latter despite the criticism it has come under in the last 10–15 years. Consumers show a surprisingly high WTP for increasing shares of SNG, with premia of 40 to almost 70% over a natural gas-based tariff. Comparing production costs to the WTP reveals that only tariffs with small shares of SNG (5% and 10%) can be offered at cost-covering prices. Conclusions Given the urgent need for a fundamental transition of the residential heating sector, marketers and policymakers should consider carefully whether it is worth channeling a rather unknown and expensive product like SNG into the voluntary market for heating gas, especially as biomethane is already established in the market and clearly a cheaper and more popular alternative.

show abstract

Section: Data Collection and Analysismentioning

confidence: 99%

Synthetic natural gas in the private heating sector in Germany: match or mismatch between production costs and consumer willingness to pay?

Rilling

2024

Energ Sustain Soc

View full text Add to dashboard Cite

show abstract

“…As in other auctions for renewable energy resources, competitive procurement of paired solar PV and BESS is subject to certain risks, hence returns for investors and economic and social impact; see, e.g., Maurer et al (2020), Cote et al (2022), andRoth et al (2022). Market designs of said auctions must therefore ensure that the benefit of market competition outweighs the cost.…”

Section: Risksmentioning

confidence: 99%

“…Such a risk is significant if the auctioned items are limited, i.e., fixed demand, and if such costs are large relative to the bidder's financial resources and project portfolio. Thus, smaller companies and local community organizations may be at a disadvantage, undermining auctions' diversity, equity, and equality, as well as ESG objectives (Eberhard et al, 2014;Amazo et al, 2021;Cote et al, 2022). As a rule of thumb, US$/tCO2e…”

Section: Biddingmentioning

confidence: 99%

“…Strategies such as (i) reduced prequalification, (ii) different pricing rules, and (iii) quotas, may significantly affect and even distort outcomes. A lack of clear taxonomy of protected groups may result in unintended consequences, as happened in Germany in 2017, where preferential rules led to artificial citizen energy communities for onshore wind that were awarded more than 90 percent of the auction volume (Kitzing et al, 2019;Cote et al, 2022). In Australia, qualifications for the state of Victoria's 2017 renewable energy auction scheme included proof of community engagement and benefit sharing.…”

Section: Millions Tco2ementioning

confidence: 99%

See 1 more Smart Citation

Multi-objective Auctions for Utility-Scale Solar Battery Systems: Lessons for ASEAN and East Asia

Toba,

Jamasb,

Maurer

et al. 2024

Economics, Law, and Institutions in Asia Pacific

View full text Add to dashboard Cite

Auctions are an increasingly popular means of competitively promoting and procuring renewable energy to meet energy, social, and climate change objectives. To succeed, the technology designs need to accommodate technological progress, declining costs, and increasing Environmental, Social and Governance (ESG) demand. This analysis examines international experiences with large-scale solar photovoltaic (PV) and battery energy storage systems (BESS) auctions, which may be useful for East and Southeast Asia. It revisits auctions' theoretical and conceptual frameworks while concentrating on the ESG aspect from the perspective of such key stakeholders as investors, government, bidders, and communities, regarding efficient allocations of risks, costs, and benefits. It then relates this framework to real-world practices and international evidence on solar PV with and without BESS. The analysis shows that integrating ESG in auction designs and business models is possible and can benefit business and sustainable development. This analysis' focus on the ESG and solar PV plus BESS in auctions contribute are nearly non-existent in the existing academic literature according to the review by del Río and Kiefer (2023).

show abstract

“…Despite its relatively smaller impact on reducing support costs, policymakers could de-risk equity financing by reducing risks during project development, for instance, through low-risk auction designs such as smaller bid bond amounts, less stringent penalties, and demanding fewer material pre-qualifications like building permits. Risky auction designs involving high financial pre-qualifications or short realization periods could increase investors' required returns on equity by as much as 1.79 percentage points (Côté et al, 2022). However, these de-risking measures would most likely not alter the bidders' equity-return requirements and reduce support costs.…”

Section: De-risking Measures and Their Effectivenessmentioning

confidence: 99%

A bigger bang for the buck: The impact of risk reduction on renewable energy support payments in Europe

Đukan¹,

Kitzing²

2023

Energy Policy

Self Cite

View full text Add to dashboard Cite

The price of actor diversity: Measuring project developers’ willingness to accept risks in renewable energy auctions

Cited by 22 publications

References 46 publications

Synthetic natural gas in the private heating sector in Germany: match or mismatch between production costs and consumer willingness to pay?

Synthetic natural gas in the private heating sector in Germany: match or mismatch between production costs and consumer willingness to pay?

Multi-objective Auctions for Utility-Scale Solar Battery Systems: Lessons for ASEAN and East Asia

A bigger bang for the buck: The impact of risk reduction on renewable energy support payments in Europe

Contact Info

Product

Resources

About