The influence of state politics on solar energy auction results
2022
Wrede, Matthias
In this paper, we analyze the impact of policy-induced opportunity costs and restrictions on the outcomes of auctions to subsidize ground-mounted photovoltaic (PV) systems in Germany since 2015. First, we examine the incidence of opportunity cost reductions for some suppliers in a simple theoretical auction model. Second, we descriptively study the volumes and prices in PV auctions in Germany. Finally, we analyze a quasi-experiment: the opening of auctions for farmland in disadvantaged areas in some German states from 2017. We show that policy-induced opportunity cost reductions lead to greater success in PV auctions only in the state of Bavaria, which has more generous quantity restrictions and is generally expected to be more supportive of solar power suppliers after 2017. As a result, there is an interregional redistribution in favor of a single state that enables and administratively effectively implements support for disadvantaged areas.
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