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Auctions for Renewable Energy Support II

Periodic Reporting for period 1 - AURES II (Auctions for Renewable Energy Support II)

Reporting period: 2018-11-01 to 2020-04-30

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 two more countries being currently 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 and introduced in EU Member States.
Due to the dynamic development of the renewable energy market, e.g. cost development, there is 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 provides additional insights to those analysed in AURES, including the following issues
• the effects of auctions on the RES sector
• technological innovation and project financing
• multi-technology and cross-border auctions
• dynamic development of the electricity systems
• auctions and community projects
• holistic overview of the conducted auctions in Europe
The overarching objective of AURES II is to support policymakers in European Member States in improving the effectiveness and cost-efficiency of their auction-based support schemes for RES. Thus, AURES II has 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 representing seven European countries and includes some of the leading energy policy experts in Europe, with an impressive track record of successful research and consultancy projects.
In its first 1.5 years, AURES II has 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. Until now, a number of results have been achieved within the different project areas:
Empirical Analysis: AURES II has analysed the implemented auction schemes in Argentina, Canada (Alberta), Chile, Denmark, Germany, Greece, Mexico, the Netherlands, Poland, Portugal, and the UK. A technology-focused case study on concentrated solar power (CSP) auctions and a case study on renewable energy communities in RES auctions have been conducted.
Auction database: We collected information on all RES auction rounds that have taken place in the EU since 2014 and published this overview in a holistic database. We provide data on the general auction design, as well as the specific auction outcomes. Additionally, we introduced the auction database in a dedicated webinar to the public.
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 more than 40 interviews with investors in Europe.
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.
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.
Policy support: An important part of the project is the cooperation with policy makers on ongoing auction implementation in EU Member States. Until now, we have successfully cooperated with policy makers in Denmark and Hungary. Although the cooperation with the other two case cooperation countries, Austria and Germany, started later in the project, we were able to provide significant input in their policy design processes. We were also able to discuss our results with the European Commission (DG Competition and DG Energy).
Knowledge sharing and capacity building: We have started a series of webinars, which will inform policy makers and the industry about best practices in RES auction design and possible challenges. We have conducted three regional workshops (in Budapest, Vienna, and Copenhagen), as well as two thematic workshops in Bilbao (WindEurope conference) and Brussels (at the CA-RES meeting). In addition, we have organised several smaller workshops where we presented our findings to relevant stakeholders. The AURES II partners participated in 22 project-external events. The AURES II newsletter has been sent out five times. Furthermore, we are also active on social media, such as Twitter and LinkedIn.
AURES II, as the successor of the AURES project, is still the only European-funded project to exclusively deal with auctions for the support of electricity from RES and provides crucial new insights for improving the effectiveness and cost-efficiency of RES support through auctions in Europe. The comprehensive and interdisciplinary approach combining political, economic and behavioural insights clearly distinguishes AURES II from existing work in this field and provides substantial value added, contributing to informed policy decision-making and to the success of auction implementations and development across Europe and beyond.
The main impact of the project is on policy making. Our analysis and cooperation activities support the elaboration of future effective and cost-efficient RES support policies in Europe. AURES II facilitates a more efficient use of tax payers’ money by identifying best practices and giving tailor-made policy support, thereby preventing inefficiencies in the implementation of future RES auctions. We derive common best practices and lessons learnt and so help policy makers and other stakeholders to replicate successful auction schemes and design elements suiting their specific situation. Furthermore, we develop and analyse new concepts that deal with and incorporate changing framework conditions.
Successful auction schemes constitute an effective means of controlling overall public financial support, thus making support policies more economically viable and thus reducing the risk of retroactive adaptation of support levels. In this, the project is helping to achieve RES targets (cost-effectively), which also has a positive impact on the environment in form of reduced emissions. The introduction of auctions as competitive, market-based schemes to allocate support payments is important for improving the market integration of RES. In addition, they make cross-border cooperation more accessible. AURES II thus contributes directly to the market transformation of the European electricity system into a more competitive, transparent and integrated market.