A Counterfactual Analysis of Regional Renewable Energy Auctions Taking the Spatial Dimension into Account

Auctions have recently been introduced in many countries as a useful alternative to accomplish renewable energy supports. However, they are often accompanied by a high concentration of renewable energy power plants at productive sites, at the expense of other, less favorable sites. This paper studies the impact of alternative renewable energy auction designs on the promotion of renewable energy in Germany using a novel multi-level approach. To do so, we analyze auctions on three different spatial levels: the national auction, the regional auction-type I (federal states level) and the regional auction-type II (north/south auction). The initial step for modeling renewable energy auction schemes in Germany is to investigate the onshore wind potential with a high regional and temporal resolution, using the GIS-data-based tool REMix-ENDAT. The results of this analysis show a considerable as yet untapped onshore wind potential in the southern federal states of Germany. Second, an onshore wind auction model is developed using a system dynamics approach. Finally, the comparison of the support payment for different auction designs is evaluated using the electricity market simulation model (HECTOR). Findings indicate that more bidders from the southern federal states can win in the regional auctions. Detailed spatial analysis reveals a trade-off between balanced diversity of bidders and average auction price (the price difference varies from 0.5 €-ct/kWh to 1.5 €-ct/kWh in different scenarios). We conduct that, a noticeable potential support payment saving from regional auctions should be exploited in long-term renewable energy policy designs.