Design options for cross-border auctions

Current developments on EU energy policy trigger interest in cross-border auctions. In contrast to national auctions, cross-border auctions are characterised by their openness for participation of projects from more than one country. For example, if country A conducts a cross-border auction that is open to projects in country A as well as projects in country B, competition is created between project developers from both countries. Cross-border auctions will typically result in cross-border flow of support payments. Economic rationales for cross-border auctions: There are several arguments for implementing cross-border auctions:
- Better natural resource potential: By tapping into better natural resource potential of a cooperation country, the amount of energy that can be generated per € invested in a certain technology may be higher.
- Higher market values: Higher market values compared to the values of domestic RES power plants can lead to a significant decrease in support payments.
- Lower cost of capital: Cross-border cooperation can under certain circumstances provide access to lower cost of capital and overall better financing conditions and thus reduce overall investment needs.
- Higher competition: Countries can use cross-border auctions to increase competition in their domestic scheme and decrease the risk of collusion.