Tenders and Reverse Auctions: A Complete Clean Energy Finance Guide
Clean Energy Finance Solutions Center
This resource—which is one of many instrument summaries offered by the Clean Energy Finance Solutions Center—provides in-depth information about tenders and reverse auctions, including best practices, case studies, design and implementation information, experts and training opportunities.
Under a tender or reverse auction program, a government or utility designs a process to select bids and procure electricity to meet specified capacity goals. Effectively designed auction approaches can lower costs through encouraging competition among developers and electricity suppliers, and they are often most effective for utility-scale projects given the costs of administering such programs. Many countries have adopted reverse auction approaches for electricity procurement, with project developers submitting bids to develop a project during a specific period. Tenders and reverse auctions allow prices to be set through a competitive bidding process, providing an approach to establish long-term fixed price contracts for electricity procurement. In some cases, auctions include specific project requirements in terms of size, technology, application and may also include other considerations for project selection.