Browsing by Subject "tukiohjelma"

The emissions from energy production should be significantly reduced and the key measure is to increase the share of renewable energy sources. In long term, this should be market-based, but so far renewable energy investments have mainly not been launched without state aid. The number of fixed feed-in tariff schemes started to increase in the beginning of the millennium. However, setting up the correct aid levels and especially taking into consideration technological development is extremely difficult. Furthermore, as the amount of renewable energy increases, the expenditure has also increased significantly. Therefore, cost-efficiency has become even more important than before. Recently schemes based on auctions have increased their popularity rapidly. Based on the experiences so far, they have proven to be a good solution for the challenges faced with previous aid schemes. There are several choices to be made when implementing auctions, which have large impact on cost-efficiency or state expenditure. The aim of the thesis has been to create an overall picture of auction schemes, the choices they require and to analyze their cost effects. The main choices are between sliding and fixed premium schemes and whether aid payment is based on the individual bids or uniform price. Previous studies have focused on the comparisons between different systems and general auction theory. In addition, there are several lessons-learned type studies. Common view is that one cannot simply copy a successful auction from one market to another. Therefore, a simulation model created for Finnish conditions makes it possible to try different choices and analyse their impact. Based on the result of the simulation model, sliding premium scheme is more cost-efficient than fixed premium scheme. Correspondingly aid based on every individual bid rather than uniform price, would become less expensive for state. Due to restrictions in the model, it is not possible to reflect the expected behavior of the bidders and thus the bids are truthful and strictly based on costs. Therefore, the real-life implications would most likely be less clear. Nevertheless, the results are in line with previous studies and reports. Due to higher risks in fixed premium scheme, the costs of capital tend to increase in comparison to sliding premium scheme. Schemes based on individual bids should be cheaper than uniform price based scheme, unless there is incentive for the last winner to increase its bid. If there is enough competition, other winning bids should fall below the last winning bid.