Efficient Promotion of Renewable Energy with Reverse Auctions

Sebastian Schäfer () and Lisa Schulten ()
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Sebastian Schäfer: University of Siegen
Lisa Schulten: University of Siegen

MAGKS Papers on Economics from Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung)

Abstract: Despite negative experiences with auctioning off subsidies for renewable energy in some countries, tenders are increasingly used today. We develop a reverse auction which accounts for particularities of intermittent renewable energy sources. Determining the quantity, demanded by the regulator, is internalized and directly linked to his two main objectives. On the one hand, the regulator seeks for a high share of renewable energy. On the other hand, he wants to enhance burden sharing between electricity consumers and renewable electricity producers. We further account for asymmetric information in reverse auctions. We analyze incentives for bidders to manipulate the auction outcome and adapt the design to prevent this behavior. Regional features as grid and generating capacity can be considered to optimize the deployment of renewable energy. We thereby introduce a link to fossil capacity auctions.

Keywords: Auction Design; Tendering; Renewable Energy; Adverse Selection; Moral Hazard; Burden Sharing (search for similar items in EconPapers)
JEL-codes: C72 D44 D47 D82 L10 Q48 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2015
New Economics Papers: this item is included in nep-ene, nep-gth and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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