Performance of Renewable Energy Policies - Evidence from Germany's Transition to Auctions

Daniel Geßner

No 105, W.E.P. - Würzburg Economic Papers from University of Würzburg, Department of Economics

Abstract: Government support for green technologies and renewable energy in particular has become an integral cornerstone of economic policy for most industrialized economies. Due to competitive price determination and supposedly higher efficiency, auctions have in recent years widely succeeded feed-in-tariffs as the primary support instrument (del Rio & Linares, 2014; REN21, 2021). However, literature still struggles to produce causal evidence to validate mostly descriptive findings for efficiency gains. Yet, this evidence is needed as a foundation to provide robust recommendations to policy makers (Grashof et al., 2020). By utilizing a difference-in-differences approach, this paper provides such evidence for a German photovoltaic (PV) auctioning program which came into effect in 2015. Results for this natural experiment confirm that cost-effectiveness improved significantly while previous literature shows that capacity expansion remained high. Results additionally show that falling prices for PV panels were the primary driver of cost reductions and wages also exert high influence on support price. Input cost development therefore indeed strongly influences support level which was the aim with introducing competitive auctions. Interest rate development cannot be linked to support level development, most probably due to the low interest environment in considered period.

Keywords: auctions; feed-in-tariffs; photovoltaic (PV); renewable energy policy; policy valuation; difference-in-differences (search for similar items in EconPapers)
JEL-codes: Q48 Q55 Q58 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-eff, nep-ene, nep-env and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:wuewep:105

DOI: 10.25972/OPUS-32542

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