Promoting Renewable Energy through Auctions
This knowledge note singles out auctions as an important mechanism that has been implemented in a growing number of countries in recent decades. It features case studies of auctions designed to promote the generation of electricity from renewable s...
| Main Authors: | , |
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| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2014/06/19670591/promoting-renewable-energy-through-auctions http://hdl.handle.net/10986/18674 |
| Summary: | This knowledge note singles out
auctions as an important mechanism that has been implemented
in a growing number of countries in recent decades. It
features case studies of auctions designed to promote the
generation of electricity from renewable sources in Brazil,
China, and India. Auctions in various forms are being used
to promote the generation of electricity from renewable
sources. Properly structured auctions can avoid the
disadvantages of feed-in tariffs and renewable purchase
obligations. Moreover, they offer the best of both of these
early mechanisms, providing stable revenue guarantees for
investors while also avoiding the risk of overbuilding. They
do this by determining both price and quantity in advance.
Promoting renewable energy through auctions is important,
because experience with the use of auctions can guide future
efforts. Among the examples of the benefits to be obtained
from generating electricity from renewable sources are (i)
increasing countries' energy security by reducing their
dependency on fossil fuel imports, (ii) reducing greenhouse
gas emissions as part of a worldwide effort to mitigate
climate change, (iii) promoting electrification while
reducing the need for isolated applications such as diesel
generators, and (iv) minimizing local pollution. Auctions
are an effective way to stimulate competition among
investors, provide price disclosure while eliciting the
right amount of investment, and offer revenue stability via
long-term contracting. |
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