Renewables Auctions Drive Competitiveness, IRENA Study Finds

Renewable energy auctions are becoming increasingly popular, owing chiefly to their ability to reveal competitive prices.  With the increasing use of auctions, policymakers seek to procure renewables-based electricity at the lowest price, and to fulfil socio-economic objectives.

IRENA's latest study on renewable energy auctions focuses on how to design auctions to achieve objectives beyond price discovery. Auctions designed in innovative ways can help to achieve specific national goals, beyond solely procuring electricity at the lowest price. Such goals might include ramping up solar and wind power; integrating higher shares of those sources into the grid; ensuring greater participation by communities, small companies or new market entrants; and maximising the socio-economic benefits of renewables, including job creation. Alongside such diverse aims, ensuring timely project completion remains a paramount objective.

Key findings:

  • Solar PV and wind are the most widely auctioned technologies.
  • Global prices for solar PV power continued their downward trend, albeit at a slower rate, while onshore wind power showed a slightly higher average global auction price in 2018 compared to the year before.
  • Renewable energy auctions are increasingly used to achieve objectives beyond price, including timely project completion, solar and wind integration, and supporting a just and inclusive energy transition.
  • Auctions can strengthen solar and wind integration by ensuring procurement of the system-friendliest power plants.
  • Auctions design, in combination with financial, industrial, labour, and education policies, can contribute to fulfilling broader socio-economic aims.

IRENA | https://www.irena.org