Are auctions likely to deter community wind projects? And would this be problematic?

Abstract

The use of auctions for determining the level of renewable energy remuneration is increasing. A cause for concern is the resulting potential to exclude smaller investors from the market, in particular community energy projects. However, empirical evidence and examination of resulting consequences have been insufficient so far. This article analyses the effects a shift from guaranteed remuneration to auctions might have on incentives to start new community wind projects, analysing the case of Germany. It thus contributes to research on investor-specific impacts of renewable energy policy instruments. An explanatory sequential mixed-method design was applied, combining surveys and interviews for the collection of expert assessments. The developed typology allows the assessment of the respective potential of different wind project types for procedural and distributive justice, which are understood to support local acceptance. Wind projects developed by the local community were found to be most beneficial for local acceptance, but appear to face the highest challenges in auctions. A crowding out of these projects would be particularly unfortunate with regard to the need to expand wind energy capacities much more. It is recommended that policy makers ensure a level playing field, also within the context of auctions, for wind projects developed by the local community.