DOI: 10.22982/NEXTWP.2022.8.1

Abstract

Majority of countries implementing renewable procurement auctions adopt price-only selection criteria to minimize total support costs. Some introduce multi-criteria auction to achieve additional policy goal as well as the cost efficiency. There are trade-offs between two schemes so that it is crucial to assess the efficiency and effectiveness of each to persuade the taxpayers. This study aims to investigate the efficiency and effectiveness of multi-criteria renewable auctions by constructing the multi-criteria agent-based renewable auction model. We simulated Korean solar photovoltaic (PV) auction market using the model, considering carbon footprint certification scheme of PV modules as a non-price selection criterion. The results show that low carbon footprint modules are extensively adopted than high carbon footprint modules, although the total costs required increased compared to the price-only auction. However, as the unit cost per carbon abatement is higher than the emission allowance cost, it is doubtful that multi-criteria auction is more cost-efficient than other policy instruments outside the auction. We have shown that the agent-based multi-criteria renewable auction model serves a useful tool to analyze the impact of auction design element on the auction results, and it can further be utilized to tailor the auction design by the model upgrade and modification.