This article employs a simple model to describe bidding behavior in multi‐unit uniform price procurement auctions when firms are capacity constrained. Using data from the New York City procurement auctions for power generating capacity, I find that firms use simple bidding strategies to coordinate on an equilibrium that extracts high rents for all bidders. I show theoretically and empirically that the largest bidder submits the auction clearing bid. All other bidders submit inframarginal bids that are low enough to not be profitably undercut. Inframarginal bidders decrease their bids as the pivotal firm's capacities and its profits of undercutting increase.
Mit Blick auf die Versorgungssicherheit im Stromsektor werden derzeit nicht nur in Deutschland verschiedene Kapazitätsmechanismen diskutiert. Dazu zählt eine Strategische Reserve, also das Vorhalten einzelner Kraftwerke, die nur in Notsituationen mit einem knappen Stromangebot und hohen Preisen zum Einsatz kommen. Die Diskussion der entsprechenden Instrumente findet bisher weitgehend im nationalen Kontext statt. Die EU-Kommission setzt zwar seit Beginn der Debatte auf die Synergieeffekte des europäischen Binnenmarktes, allerdings dominieren bisher noch einzelstaatliche Interessen die Diskussion. Vor diesem Hintergrund hat das DIW Berlin die Möglichkeiten der grenzübergreifenden Koordination einer Strategischen Reserve, die den Strommarkt absichert und die Energiewende in Deutschland und Europa unterstützt, betrachtet. Die Analyse zeigt, dass eine Strategische Reserve, die Erzeugungskapazitäten außerhalb des marktbasierten Stromhandels für extreme Knappheitssituationen vorhält, die Versorgungssicherheit erhöhen und kompatibel zum EU-Strombinnenmarkt ausgestaltet werden kann. ; Various capacity mechanisms are currently being discussed in Germany and beyond with a view to increasing supply security in the power sector. One of these mechanisms includes keeping a strategic reserve which means only using specific individual power plants in emergency situations when supply is limited and prices are high. The debate on whether and which instruments to use has, so far, largely taken place in a national context. Since the start of the debate, the EU Commission has indeed opted for the synergy effects of the single European market but the national interests of individual countries dominated the discussion. Against this background, DIW Berlin has studied the possibility of coordinating a strategic reserve between countries to secure the power market and support the energy transition in Europe. The analysis shows that a strategic reserve of generating capacity that is only dispatched above a defined strike price would increase supply security and would be compatible with the internal EU power market.
With the European Strategic Energy Technology Plan (SET Plan) expiring in 2020, the EU needs to revisit its energy technology policy for the post-2020 horizon and to establish a policy framework that fosters the achievement of ambitious EU commitments for decarbonization by 2050. We discuss options for a post-2020 EU energy technology policy, taking account of uncertain technology developments and uncertain carbon prices. We propose a revised SET Plan that enables policy makers to be pro-active in pushing innovation in promising technologies, no matter what policy context will be realized in the future. In particular, we find that a revised SET Plan is needed to support EU market actors who face market failures with respect to financing innovation within a highly competitive global market for energy technologies. An extension of the current SET Plan and corresponding technology push policies is insufficient, as this does not allow policymakers to provide adequate support, especially in a policy context with low or zero carbon prices.
As current policy frameworks are expiring in 2020, the EU is revisiting its energy technology policy for the post-2020 horizon. The main long-run objective for energy technology policy is to foster the achievement of ambitious EU goals for decarbonisation by 2050. Given this objective, we discuss how European energy technology policy towards 2050 can be effective despite i) uncertain carbon prices, ii) uncertain technological change and iii) uncertain or alternating policy paradigms shifting its focus from decarbonisation to competition or security of supplies. Public support to innovation in energy technologies is needed to correct for market failures and imperfections, as well as to fully exploit trade opportunities of such technologies on the world market. Benefits from EU intervention can be expected from the coordination of national policies. Effective European technology push should put strong emphasis on pushing consumption-oriented and enabling technologies, as these offer a no-regret strategy vis-à-vis any future context.
