Auctions for Renewable Energy Support II

Project Information

AURES II

Grant agreement ID: 817619

DOI 10.3030/817619

Closed project

EC signature date 2 October 2018

Start date 1 November 2018

End date 30 April 2022

Funded under

• SOCIETAL CHALLENGES - Secure, clean and efficient energy

Total cost € 2 594 057,50

EU contribution € 2 594 057,50

Coordinated by

FRAUNHOFER GESELLSCHAFT ZUR FORDERUNG DER ANGEWANDTEN FORSCHUNG EV
Germany

Periodic Reporting for period 2 - AURES II (Auctions for Renewable Energy Support II)

Reporting period: 2020-05-01 to 2022-04-30

Summary of the context and overall objectives of the project

In recent years, auction schemes for the allocation of support for renewable electricity sources (RES) have been increasingly used across Europe. Currently, 19 European Member States have conducted RES auctions, with several more in the process of implementing them. In general, auctions have mostly succeeded in bringing down support levels and increased planning capability for RES deployment and support costs. Apparently, the success or failure of using auctions depends on the individual design of the auction, while a variety of auction designs are still being tested in EU Member States.

Due to the dynamic development of the renewable energy market, e.g. cost development, there has been a need for further assessing and improving national auction applications to ensure also future success of RES auctions in Europe. The Horizon2020 project AURES, which ended in 2017, provided comprehensive analyses on RES auctions and laid the theoretical and empirical groundwork for their introduction in many EU Member States. AURES II provided additional insights to those analysed in AURES, including the following issues:
• lessons learnt from European RES auctions
• holistic overview of the conducted auctions in Europe
• auction design and policy objectives
• the effects of auctions on the RES sector and on technological innovation
• financing conditions of RES projects
• multi-technology and cross-border auctions
• auctions and RES community projects
• zero-support auctions
• the future of auctions

The overarching objective of AURES II was to support policymakers in EU Member States in improving the effectiveness and cost-efficiency of their auction-based support schemes for RES. Thus, AURES II had three specific objectives:
1) Generate and communicate new insights on the applicability, performance, and effects of specific auction designs
2) Provide tailor-made policy support for different types of auction applications
3) Facilitate knowledge exchange between stakeholders

The project consortium consists of eleven renowned public institutions and private firms from seven European countries, including some of the leading energy policy experts in Europe, with an impressive track record of successful research and consultancy projects.

Work performed from the beginning of the project to the end of the period covered by the report and main results achieved so far

Over the past 3.5 years, AURES II established solid foundations for supporting the effective and cost-efficient implementation of RES auctions in Europe, through target-oriented analysis as well as knowledge sharing and capacity building activities. By the end of the project, a number of results have been achieved:

Empirical Analysis: AURES II has analysed auction schemes in more than 20 case studies. In addition, two peer-reviewed research papers investigating the interaction between policy objectives, such as cost-efficiency, and the auction design elements, were developed.

Auction database: We collected information on all RES auction rounds that have taken place in the EU since 2011 and published this overview in a holistic database.

Impact on the RES sector: We have investigated how the introduction of auctions has influenced the RES sector. The first report looked at the value chains, while the second analysis focused more on the effect of auctions on technological innovation in the RES sector. The work was complemented by a report on the competition dynamics, looking at the RES markets in Spain and Germany.

Financing conditions: In a dedicated analysis, we have looked into the effects of RES auctions on the financing costs of renewable energy projects. In more detail, we provided a first indication, on how specific design elements affect the financing conditions. Based on these insights, a peer-reviewed research paper was published. A report with specific policy recommendations for reducing the risk for bidders in RES auctions has concluded these analyses.

Cross-border auctions: We have published a report, which provides a comprehensive overview of possible design elements of cross-border auctions and their effects. In addition, in a theoretical analysis, we have analysed the various aspects and design options for cross-border auctions. Several case studies on potential cross-border auctions in Europe provided a more practical approach to this topic, which was complemented by a guidance document for policymakers.

Multi-technology auctions: Based on a variety of experiments, we derived conclusions on the effects of several design elements of multi-technology auctions. The dedicated research paper is currently undergoing peer-review in an academic journal. Moreover, we published a dedicated report that provides an overview on multi-technology auctions in Europe.

Future of auctions: Several studies looked into the future of auctions in the energy system. We developed four scenarios of the future electricity system and the role of auctions therein. Modelling activities of the European energy system provided further insights. Another report looked more specifically into the role of auctions in sectors beyond electricity, e.g. in the transport sector. This was complemented by several policy briefs, e.g. on auctions in the heating sector or auctions for green hydrogen support.
Policy support: An important part of AURES II is the cooperation with policymakers on ongoing auction implementation in EU Member States. We successfully cooperated with policymakers in Austria, Denmark, Germany, and Hungary. In addition, we supported a number other countries, such as Ireland or Ukraine, and cooperated with the Energy Community Secretariat. We also discussed our results with the European Commission (DG Competition and DG Energy).

Knowledge sharing and capacity building: We produced a series of podcast episodes, which inform about best practices in RES auction design and possible challenges. We conducted six regional workshops, as well as nine thematic workshops. The AURES II partners participated in 33 project-external events. Our newsletter was sent out 28 times. Furthermore, we are also active on social media, such as Twitter and LinkedIn.

Progress beyond the state of the art and expected potential impact (including the socio-economic impact and the wider societal implications of the project so far)

AURES II, as the successor of the AURES project, dealt with auctions for the support of electricity from RES. We provided crucial new insights for improving the effectiveness and cost-efficiency of RES support through auctions in Europe and for better understanding the effects of auctions. The comprehensive and interdisciplinary approach combining political, economic and behavioural insights clearly distinguished AURES II from existing work in this field and provided substantial value added.

The main impact of the project was on policymaking. Our analyses and cooperation activities supported the elaboration of future effective and cost-efficient RES support policies in Europe. AURES II facilitated a more efficient use of tax payers’ money by identifying best practices and giving tailor-made policy support. We derived common best practices and lessons learnt and so helped policymakers and other stakeholders to replicate successful auction schemes and understand the effects of specific auction designs.

Expected impacts are to provide essential knowledge about the functioning of RES auctions and to ensuring the usage of the new knowledge. AURES II has reached almost 900 participants in dedicated workshops and webinars, with more than 9,000 stakeholder interactions. The AURES II website has been visited more than 28,000 times by the end of the project with almost 9,000 document downloads.

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