Bidding processes are used in various economic sectors, and with good reason. But do those reasons apply to the energy sector – and, in particular, to Germany’s energy transition goals? Craig Morris presents the findings in a recent study by IZES. Germany is to switch from feed-in tariffs to a system of reverse auctions (see the previous article). To be fair, both of these policy options must be properly designed, and if you get something wrong, the outcome can easily be undesired. The more important question is therefore how likely desired outcomes will be under real-world conditions from the two policy options. The study says the most attractive thing about reverse auctions is that the government does not have to spend a lot of time trying to find the right market price, as is required for feed-in tariffs; in auctions, bidders reveal the lowest market prices. IZES points out that reverse auctions have proven to be very successful in the construction sector, for instance, both in reducing costs and speeding up projects. On the other … Continue reading Getting energy policy design right