Effect of auctions on RES value chains

Abstract

It is often argued that a key feature of auctions is the competitive pressure created on the overall value chain, and indeed all actors of the renewable energy (RE) sector. Moreover, it is often argued that auctions can induce a reduction in the level of actor diversity (AD) in some segments of the value chain, and especially in the project development sector. In the process of designing an auction, policy makers must make specific decisions and trade-offs related to the auction design elements (DEs). Depending on those trade-offs, auctions may favour certain types of actors over others, and this may lead to increased levels of market concentration (MC). This present study empirically analyses the following two topics: • The impacts of different auction DEs on MC in the project development and component manufacturing segments of the RE value chain. • The relative impact of auctions (as compared to other (contextual) factors influencing the value chain) on MC in the project development and component manufacturing segments of the value chain. Case study analysis were undertaken in four countries, namely Peru (solar PV; wind power), Spain (onshore wind power), South Africa (solar PV; wind power; and concentrated solar power (CSP)), and the United Kingdom (offshore wind). In order to get an in-depth and up-to-date understanding of how auctions and their DEs influence project developers and component manufacturers, country and technology level case studies were undertaken based on structured interviews with key experts in the respective countries.