Academic research on renewable electricity auctions: Taking stock and looking forward

Abstract

Auctions are currently the dominant and most rapidly expanding form of support for renewable energy project deployment, capturing the interests of policy-makers and academics alike. This article provides a systematic review of the relatively recent but already abundant literature on auctions for renewable energy and proposes a future research agenda on the topic. Major themes, gaps in knowledge, and trends in the literature are highlighted. More research efforts will be needed on the institutional capacity and arrangements, coordination between auctions and other procedures and appropriate inclusion of auctions in policy mixes. The trade-offs between different criteria should be the focus of more rigorous and quantitative marginal analysis, identifying the extent to which improving a given criterion worsens another. The existence, causes and consequences of underbidding, the implications of the just energy transition for the performance of auctions and auction design, the marginal impact of the level of design elements and the interactions between design element choices in “design element packages” merit more attention. There should be a greater focus on the micro-level in the assessment of the success of auctions and auction design. At a methodological level, assessments of auctions with case studies should coexist with more quantitative studies on the topic, using a wide range of methodologies. However, the transferability of lessons on the functioning of design elements across different contexts will be necessarily limited. Finally, a plea is made to national governments and international institutions to facilitate the access to auction data.