Putting renewable energy auctions into action – An agent-based model of onshore wind power auctions in Germany

The following analysis looks into auctions for renewable energy, specifically onshore wind power in Germany. Following an agent-based modeling approach, the two most commonly applied auction pricing rules are compared (uniform and pay-as-bid) and first conclusions on outcomes are drawn for future policy design. The auctions are modeled to closely represent the auction design foreseen in the German Renewable Energy Sources Act (EEG, 2017) and replicate their parameters. The analysis draws on auction theory. For both pricing schemes, individually rational agents with independent valuation are assumed. As support for renewable electricity through auctions is to be established permanently and auction rounds will be held multi-annually, a further focus lies on agents learning over time by adapting their behavior to new information. The model results show that pay-as-bid exhibits lower prices and thus support costs than uniform pricing, whereas allocative efficiency suffers under pay-as-bid. Over time, one can observe a decline in the strike price, which is due to learning effects, whereas agents' profits increase in the course of the auctions. Furthermore,smaller actors will experience difficulties and agent diversity is likely to suffer in the long term, if this is not accounted for in other ways

Impact of a yearly reference period on the sliding feed-in premium for onshore wind in Germany

In Germany, support for onshore wind is calculated based on technology-specific monthly market values. To increase market integration of renewables, changing to a yearly reference period is under consideration. This reference period increases the price exposure and thus the overall risk for generators. To understand the effects and quantify this risk, we examine an individual turbine’s average annual income at three locations in Germany between 2012-2018, as well as the maximum difference under the two alternative reference periods. We find no difference in income for strike prices between 0-15 EUR/MWh and a lower income under the yearly reference period for strike prices close to the nationwide market value (15-45 EUR/MWh). Starting from 45 EUR/MWh, we observe increased incentives for market integration. Furthermore, we find a maximum income loss of 3.6-3.9 EUR/MWh. Thus, although a yearly reference period could affect the income negatively, the difference is rather marginal

Bringing climate policy up to date - decreasing cost projections for renewable energy and batteries and their implications: Discussion paper within the project "Implikationen des Pariser Klimaschutzabkommens auf nationale Klimaschutzanstrengungen". Project No. (FKZ) 3717 41 102 0

A range of studies on nationally determined contributions (NDC) of parties to the Paris Agreement disclose, that temperature objectives of the Paris Agreement are not in reach if current NDCs are implemented. A new study, commissioned by German Environment Agency, compares pre2015 and latest levelized cost projections and shows, that certain key mitigation technologies, i.e. power generation from renewables and lithium batteries, will become substantially cheaper by 2025/2030 since the preparation of NDCs. Thus, parties to the Paris Agreement are now in the position to review and strengthen their NDCs by 2020 during the Talanoa Dialog

Contracts-for-difference to support renewable energy technologies:Considerations for design and implementation

In this work, we present the major application and impact areas of Contracts-for-Difference (CfDs) in a European context, describe the most relevant design dimensions and discuss several design packages for CfDs as combinations of distinct design choices. We discuss these separately and in comparison. We also provide a detailed overview of CfD schemes implemented in Europe.This work comes against the backdrop of an ongoing European debate on reforming the electricity market and the broader introduction of CfDs. Leading voices in academia, the EU and its Member States agree that electricity markets must be supplemented with additional long-term options, including CfDs. Different experts advocate for different versions and implementation options of CfDs, including generation-based and generation-independent design approaches. Unfortunately, the already existing breadth and variety of design options for CfDs are not always acknowledged and hence comparisons and assessments have so far only been made on a partial foundation.A key design question for renewable support schemes in general, and CfDs in particular, is how to prevent electricity market distortions and preserve short-term, operational market integration without jeopardising the effectiveness of the schemes in leveraging investment of private capital for renewable energy deployment. We show in this report that a number of different CfD designs have already been developed aiming at preserving dispatch efficiencies and are, in fact, already implemented in various European countries. We describe how generation-based CfDs can be non-distortive for day-ahead markets based on existing designs. We discuss remaining issues that mainly arise through spill-over incentive effects across market segments (e.g. towards intraday, balancing and futures markets). We also discuss generation-independent CfDs, which have theoretical advantages over generation-based designs, in particular in relation to intraday and balancing markets, but feature unresolved implementation challenges and would imply rather significant changes in the market.We find that every CfD implementation faces numerous design choices, which all come with their own challenges and trade-offs. The answers to many CfD design questions will be highly context-specific, and evaluations for different CfD design choices must take into account the idiosyncrasies of each specific environment and market situation.With this report, we strive to contribute to an objective debate in which all stakeholders can engage in an unbiased discussion of pros and cons, strengths and weaknesses of all CfD design options, to find the best solution for each country and market situation. We strive for this report to become a comprehensive reference that provides overview and discussion of impact areas, design dimensions and choices for different CfD types. This report shall give opportunity for an informed basis for discussion of CfD designs supporting the European leap towards CfDs as a major mechanism for the support of renewable energy

Financing conditions of renewable energy projects – results from an EU wide survey

This data note aims to present a dataset with values for financing conditions for renewable energy projects in Europe. This includes weighted average cost of capital, cost of debt, cost of equity, debt share, debt service coverage ratio and loan tenors. The dataset was elaborated in the framework of the "Auctions for Renewable Energy Support II" project (AURES II). The main goal of the AURES II project is to provide policy support to the Member States of the European Union in order to improve the effectiveness and cost-efficiency of auctions for renewable energy support. As part of the AURES II project, an extensive survey (structured interviews) was conducted between September 2019 and April 2020 with different stakeholders involved in the renewable energy industry, such as banks, project developing companies, and investment funds, among others. The technologies covered were solar photovoltaics (PV), wind onshore, and wind offshore. Interviewees were asked to provide values for financing conditions for specific projects (for certain cases, country estimates or ranges of values were provided). Spain, Portugal, Greece, Germany, and Denmark were selected as focus countries, for which the interviews also included qualitative questions to discuss the observed quantitative data in these countries. The presented data has been used as the main input to elaborate an AURES II report on renewable energy financing conditions in Europe

Self-consumption rises due to energy crises? An evaluation of prosumers' consumption behavior in 2022

Prosumers with photovoltaic systems can reduce their electricity expenses by increasing their consumption of self-generated electricity. This makes them more resilient to price shocks, like the 2022 European energy crisis. We evaluate how prosumers adapt their consumption behavior in response to such political uncertainty and increasing electricity prices. The collected survey and smart meter data allow us to evaluate the perceived self-reported and measured impact on self-consumption. Saving intentions due to the energy crisis are more clearly displayed by the survey than by the measured self-consumption. While solar radiation predominantly explains self-consumption changes, Google searches on electricity-related topics have limited explanatory power. However, considering time lags and the interaction with solar radiation leads to more nuanced insights on the effect of Google searches. Depending on the level of solar radiation, the effect of Google searches ranges from decreasing the daily self-consumption by 26.45 Wh to increasing it by 69.45 Wh