IRENA Publishes Best-Practice Guidebook on Renewable Energy Auctions Worldwide

Renewable energy auctions are increasingly becoming a policy tool of choice to support renewable energy deployment. They are meant to decrease costs, attract investment and drive global renewable energy deployment, the International Renewable Energy Agency (IRENA) said on the occasion of the publication of a best-pratice guidebook on auctions. The guide provides case studies from around the world and guidelines for renewable energy tendering processes.

1. IRENA Guide on Renewable Energy Auctions

The guidebook finds that more than 60 countries have now adopted renewable energy auctions, up from six in 2005, largely due to their ability to attract competition and drive down costs.

It analyses auction design elements and highlights best practices for policy makers and investors considering auctions in their own countries. It finds that auctions around the world attract investment and decrease costs through competition, for example in South Africa ad in the United Arab Emirates,

The guide includes a summary for policy makers and an overview of renewable energy policies and auctions. It also includes technical auction design sections on demand, qualification requirements, the winner selection process and sellers’ liabilities. It builds on IRENA’s 2013 report Renewable Energy Auctions in Developing Countries, which demonstrated the effectiveness of auctions in selected markets, including Brazil, China, Morocco, Peru and South Africa.

2. State of Play of Auctions in Germany

The 2014 amendment of the Renewable Energy Sources Act (EEG 2014) has introduced auctions for freestanding PV power plants (cf. Section 55 EEG 2014 and the Ordinance for Competitive Bidding for Financial Support of Freestanding Installations (FFAV), which builds on Section 55 and contains detailed stipulations regulating the auction procedure).

The first PV auction took place in April. 150 MW of freestanding PV capacity were auctioned. 25 bids with a total capacity of 156.97 MW were accepted at an average rate of 9.17 ct/kWh (successful bidders receive support in the amount of their bids). This is lower than the maximum of 11.29 ct/kWh allowed for bids, yet higher than the current reference value of 9.02 ct/kWh based on which the market premium for freestanding solar installations under the EEG 2014 has been computed so far (for more information, please see here). In 2015 two more PV tenders will be held on 1 August (150 MW; for more information, please see here) and on 1 December (200 MW). In 2016 a total of 400 MW will be tendered, followed by 300 MW in 2017.  Pursuant to Section 55 para. 3 EEG 2014, financial support for new freestanding PV installations can only be claimed by those that successfully participate in auctions following a transitional period ending on the first day of the seventh month after the announcement of the first tender for PV installations, i.e. 1 September 2015.

For all other renewable energy source the EEG 2014 stipulates that auctioning shall start in 2017 at the latest (cf. Section 2 para. 5 EEG 2014). In preparation the Federal Ministry for Economic Affairs and Energy presented market analyses on the other renewable energy sources in March and launched a consultation. On 9 June 2015 there was an Energy Breakfast Seminar at the law firm Bird & Bird in Düsseldorf on the status of plans for auctioning wind power in 2017. For more information, please contact us.

Source: IRENA

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