Technology neutral auctionsLászló Szabó
Director, REKK
Budapest, 24.06.2019
AURES has received funds for the years 2018-2021 from the European Union’s Horizon 2020 research and innovation programme under grant agreement no. 817629
• 9.15-10.45: Session I: Multi-technology auctions• Coffee Break
• 11.15-12.45: Session II: Financing issues in auctions• Lunch Break
• 13.45-15.15: Session III: Special topics of auction design
• Conclusion Session
Programme of the AURES Regional Workshop
2
Why financing is in the focus?
WACC estimations can
change significantly, SEE
change between 2014-16
Source: Diacore, Ecofys 2016
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4
Agenda
• Overview
• Hungarian auction design
• Lessons from multi-technology auctions
• Concluding remarks
5
Hungary plans for first RES auctions in 2019 (1)
Main objectives:
• lower support expenditure of RES
• comply with policy/regulatory requirements (EU State Aid)
Risks to avoid:
• Low competition level: in case of low competition,
inefficiencies in the auction outcome can arise
• Strategic behaviour of bidders: bidders can behave in
certain, unfavourable ways, which can increase support
costs
• Non-compliance of targets: in case of low realisation
rates, RES targets might be missed
• Actor concentration: auctions tend to favour bigger
players, which can decrease actor diversity
Main design Objectives
Hungary plans for first RES auctions in 2019 (2)
Technology neutral
Budget limit
Price only
No technology discrimination -
however wind cannot participate
EU requirement –
but not too much experience yet
Makes design more complex –
no certainty on the volume!
Control for support expenditure
Awarding lowest-cost projects
Ensure support efficiency
Guiding principles in technology neutral auctions
• Ensure sufficient competition! • Supply > demand
• Decrease (administrative) barriers for developers
• If uncertain, reduce auction volume or set a ceiling price
• Ensure equal level of playing field:• Not the same constraints but same rules on technologies
• E.g. on deposit level: the same % of investment costs
• E.g. realistic realisation period – which can differ by technology
• Ensure fairness and avoid unfavourable incentives:• Bids are binding/realisation commitment
• Lowest bid wins
• Winning bidders never receive less support than they asked for in their bid
Same rules for all
participants!
Clear, simple rules!
No frequent changes!
Retroactive changes
European PV auctions
9
Source: Aures I: Ecofys, REKK
0
5
10
15
20
25
€cent/kW
h
French PV (small size: up to 250 kW) French PV (above 1 MW)German PV (up to 10 MW, 20 year) Dutch PV (15 year)Polish PV (under 1 MW) multi-tech Polish Wind* (above 1MW) multi-tech
European PV auctions
10
Source: Aures I: Ecofys, REKK
0
5
10
15
20
25
€cent/kW
h
French PV (small size: up to 250 kW) French PV (above 1 MW)German PV (up to 10 MW, 20 year) Dutch PV (15 year)Polish PV (under 1 MW) multi-tech Polish Wind* (above 1MW) multi-tech
Multi-technology and
tech. neutral autions
Ensuring competition: onshore wind auctions in Germany
0
0,5
1
1,5
2
2,5
3
3,5
0,00
10,00
20,00
30,00
40,00
50,00
60,00
70,00
80,00
2017_1 2017_2 2017_3 2018_1 2018_2 2018_3 2018_4 2019_1
Bid
volu
me/a
uctioned v
olu
me
EU
R/M
Wh
Support levels Ceiling price Average support level Competition Source: V. Anatolities
Concluding remarks
• Hungary selected a general auction design with high complexity
• Further complications e.g. on pricing rules, differentiation of auction baskets (e.g. by size, technologies) should be avoided in order to keep number of participants high
• The clear rules would also make financing more readily available
• Keep the present regulatory directions:
• E.g. present support level reduction was moving support level closer to LCOE
• Continue with the suspension of the other renumeration schemes – actors should concentrate on the auctions now
• Further clear the rules for grid connection
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AURES has received funds for the years 2018-2021from the European Union’s Horizon 2020 research and innovation programme
under grant agreement no. 817629
László Szabó
Regional Centre for Energy Policy Research (REKK)
AURES II
Website: http://aures2project.eu/
LinkedIn: AURES II
Twitter: @auctions4res
Newsletter: http://eepurl.com/gd42zz
