Firms' Bidding Behavior in a New Market: Evidence from Renewable Energy Auctions
Auctions are increasingly used by governments to select suppliers and define levels of policy support. In the context of investments into renewable energy (RE), they became dominant for the ongoing energy transition. This paper makes use of unique bid-level data from German RE auctions (2015-2019) and documents bidding behavior of firms over time as well as recovers valuations of bidders by estimating a structural model of multi-unit auctions. We show that bidding behavior changed depending on whether we study the period when average bidding prices fall or when they have stagnated. We investigate alternative mechanisms for the observed price evolution in this market, such as the number of competitors, and perform counterfactual analysis regarding the implementation of a uniform auction format.