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

Tanvir ALAM Shahi ()
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Tanvir ALAM Shahi: Ph.D. Fellow, Doctoral School of Economics University of Szeged, Szeged, Hungary

Annals of Faculty of Economics, 2023, vol. 1, issue 1, 14-32

Abstract: 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.

Keywords: Renewable Energy; Auction; Socio-Economic Development; Gains (search for similar items in EconPapers)
JEL-codes: D44 O13 P28 Q42 (search for similar items in EconPapers)
Date: 2023
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