Simulating Renewable Energy Auctions for Offshore Wind

Abstract

Renewable energy auctions seek to efficiently allocate subsidy support and trigger cost reductions in renewable technologies, including offshore wind. However, the design of these auctions to ensure efficient allocation of subsidy resources which successfully supports the realisation of renewable projects is challenging. Furthermore, due to the uncertainty associated with future cost and revenue streams, bidding into these auctions is risky for renewable developers. Simulation of renewable auctions can be used as a tool for analysing auctions. It allows for different auction rules to be tested and the effect on auctions can be analysed. Auction simulation also allows developers to characterise the uncertainty associated with their bid price and so can help with price discovery and strategic bidding. This thesis describes the design, development, and various applications of a novel modelling approach for simulating CfD auctions The modelling approach has use cases and implications for policymakers and renewable generators alike and has been developed in partnership with industrial partners with active participation in CfD auctions.