Accelerating the expansion of renewable energy sources could threaten their competitiveness, a new report has claimed.
But Aurora Energy Research argues that this is questionable under the current market design.
The analysts, however, suggested that policy changes such as implementing a carbon price floor or improving power purchase agreement (PPA) structures could increase competitiveness for renewables.
Onshore wind prices initially fell as Germany held its first auctions, but costs have risen since citizens’ projects were stripped of privileges including longer implementation periods and no permitting requirement.
Aurora Research points out that actual subsidies will be higher than published results because auction bids are given for a reference location with a standardised location, but in practice, guaranteed prices are corrected by location-specific measurements.
This, the analysts conclude, suggests that current projects are “far from being competitive”. Further, with increasing market saturation, the quality of available sites is likely to decrease.