Auction design for renewable energies

© Shutterstock 211310194

In this project we examine how different auction formats affect feed-in premiums and the regional distribution of awarded power plant projects, as well as which of those allow a targeted expansion of generation capacity. We therefore analyze various multi-object auction designs in numerical simulations in order to identify the most welfare-optimal auction regime with regards to feed-in premiums, proximity to demand centers as well as complexity and practicability.

  • Which auction formats allow a targeted expansion of generation capacity?

  • Which auction format is welfare-optimal with regards to feed-in premium, proximity to demand centres as well as complexity and practicability?

  • Based on field data, we analyse various multi-object auction designs in numerical simulations. We calculate the outcome on both national and regional level for German onshore wind auctions using different scale economies.

  • Using the current status-quo as a benchmark, we compare the results to identify the auction regime providing the most welfare-optimal distribution of power generation capacities and feed-in prices.

  • We find that especially regional auctions allow for a targeted expansion of generation capacities and can thus lead to a superior allocation of wind capacities that are more concentrated in the South and closer to the main demand centres.

  • Based on this, we can provide valuable suggestions to improve the German auction regime.

  • Prof. Dr. Martin Bichler (TU München)

  • Paul Sutterer (TU München)

Research team

Prof. Dr. Veronika Grimm

FAU Erlangen-Nürnberg / Chair of Economic Theory

Sandra Kretschmer

FAU Erlangen-Nürnberg / Chair of Economic Theory

Further reference projects