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New Report Offers Guidance on Designing Effective Renewable Energy Auctions

Friday, June 19, 2015

New Report Offers Guidance on Designing Effective Renewable Energy Auctions

A new guide from the CEM's Multilateral Working Wind and Solar Working Group offers advice for policy makers on designing effective renewable energy auctions. Photo credit: U.S. Department of Energy

Successful policies have been instrumental in encouraging renewable energy investment and stimulating the sector’s development. With the rapid decline in renewable energy technology costs, it is necessary to adapt policies and support mechanisms to continue to promote deployment in a sustainable manner that makes efficient use of public funding and avoids market distortions. Renewable energy auctions are a market-based mechanism that, when appropriately designed,can help maintain a stable and attractive environment for investments in the sector while increasing transparency and fostering competition. A new report published by the Clean Energy Ministerial’s Multilateral Working Wind and Solar Working Group provides key recommendations to guide policy makers in designing effective renewable energy auctions.

The six volumes of Renewable Energy Auctions: A Guide to Design can be downloaded at no cost from the CEM or IRENA websites.

Developed in partnership with the International Renewable Energy Agency (IRENA), Renewable Energy Auctions: A Guide to Design advises policy makers on the implications of different approaches to renewable energy auctions. Structured around key auction design elements, the report offers choices and recommendations to support optimal decision-making in different contexts. Auction designs can emphasise cost effectiveness, supply security, or socio-economic development objectives.

Building on case studies from Clean Energy Ministerial member countries, inputs provided during a workshop and a working group meeting, and earlier IRENA publications, the guide presents the main trade-offs involved in auction design decisions and suggests ways to find the right balance for each jurisdiction. The report is divided into six chapters: 

Each chapter can be downloaded from either the IRENA or the Clean Energy Ministerial websites.

Auctions for contracts to develop power generation capacity have emerged as an essential policy instrument for many countries to promote the transition to renewable energy sources and technologies. The number of countries relying on auctions has risen from just six in 2005 to more than 60 by early 2015. Well-designed auctions can meet a jurisdiction’s goals and objectives while also attracting a large number of players, which increases competition and ensures lower costs. 

An initiative of the Clean Energy Ministerial, the Multilateral Solar and Wind Working Group works to lower the costs of solar and wind energy in regions around the world.

The International Renewable Energy Agency (IRENA) is an intergovernmental organization that supports countries in their transition to a sustainable energy future and serves as the principal platform for international cooperation; a center of excellence; and a repository of policy, technology, resource, and financial knowledge on renewable energy.