Evolution of auction schemes for renewable energy in Turkey: An assessment on the results of different designs

Abstract

This paper examines the results of the last three renewable energy auctions in Turkey, which were carried out by using different auction designs. Our goal is to analyze the consequences by assessing the effectiveness of each method in terms of cost, realization, equality and competitiveness, in order to identify the best method and to make recommendations to the policymakers based on our past auction experiences. Our results have shown that the completion rates of the winning projects have remained relatively low in the past two auctions, mainly due to financial difficulties faced by investors, strict regulatory obligations, project-specific reasons, poor project management and intentional postponements. Although these problems may also arise in the case of recently awarded wind energy projects, the current auction scheme, which is based on the principle of offering the lowest FIT price, appears to be the most appropriate choice thanks to its contribution to the reduction of the level of support through competition. However, we propose including completion bonds to control underbidding and readjustment for the application of local content tariffs in order to achieve more efficient results in future applications.