Multi-unit renewables auctions for small markets - Designing the Danish multi-technology auction scheme

Authored by Marijke Welisch

Date Published: 2019

DOI: 10.1016/j.renene.2018.07.044

Sponsors: European Union

Platforms: No platforms listed

Model Documentation: Other Narrative

Model Code URLs: Model code not found

Abstract

This paper investigates different criteria for the design of multi-unit renewable energy (RES) auctions in small markets. The multi-technology RES auctions which are to be implemented in Denmark in 2018 serve as an exemplary case for the assessment. Focus of the analysis is how setting the auction schedule and the auctioned volume per round impacts the auction outcomes, accounting for the particular challenges of small markets. Agent-based modelling of the Danish auctions scheme demonstrates that the Danish RES market provides sufficient competition to auction higher volumes and follow more ambitious expansion goals. Furthermore, with a fixed budget, it is more effective in terms of deployment achieved, to hold fewer auctions with a larger volume. A flexibility mechanism that allows up to 50\% of the auction volume to be shifted between auction rounds to accommodate potential large-scale marginal bidders, proves to be a useful tool to increase deployment rates, without negatively affecting bid prices. Furthermore it was shown that at current cost levels, only onshore bidders would be awarded in the envisaged multi-technology scheme. Also, large-scale and multi-project bidders are likely to be most cost competitive - indicating that further measures to maintain diversity could be useful. (C) 2018 Elsevier Ltd. All rights reserved.

Tags

Agent-based modelling Auction Electricity System Renewable electricity Market value