Germany has now conducted auctions for wind, solar, and biomass. But if the headlines are optimistic, the outcome is massively oversold. Craig Morris takes a closer look. Numerous commentators continue to praise Germany for switching from feed-in tariffs to auctions. The screenshot below is from an Energy Post newsletter from this summer. A lot of it is wrong. Feed-in tariffs guarantee a price, not revenue; the amount of power generated is not set by law. And it’s amazing that we hear that FITs “don’t provide an incentive” to lower costs. In the chart below, FITs accounted for almost all of the solar installed worldwide from 2014 until 2015, and prices fell by two thirds. Are auctions at least driving down costs faster? They do keep costs low in one respect: by shutting out expensive projects. But they can also drive up costs because losing bids lead to losses that firms price in for future bids. But the main effect is that prices for the future are reported as though they applied today. Take a look … Continue reading The state of auctions in Germany