2013-05-31-IRENA-Renewable_Energy_Auctions_in_Developing_Countries_52页_1mb

Renewable Energy Auctions in Developing Countries

Introduction

Renewable energy auctions are becoming increasingly popular in developing countries as a cost-efficient way to promote renewable energy deployment. These auctions, also known as demand or procurement auctions, allow governments to contract renewable energy projects through competitive bidding, ensuring price discovery and cost efficiency.

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Trends in Renewable Energy Auctions

• Growing Adoption: The number of countries using renewable energy auctions increased from 9 in 2009 to at least 44 by 2013, with many being developing nations.
• Key Drivers: Falling costs of renewable technologies, increased project developer capacity, and past policy experience contribute to the rise of auctions.
• Types of Auctions: Three main types are discussed:
  1. Sealed-bid auctions: Projects submit bids simultaneously; the lowest price is selected.
  2. Descending clock auctions: Prices are progressively lowered until demand is met.
  3. Hybrid auctions: A combination of descending clock and sealed-bid auctions.

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Case Studies

1. Brazil:
   • Hybrid auctions (descending clock followed by sealed-bid) were successful in contracting RE capacity.
   • Local content requirements promoted domestic industry growth, though underbidding was a concern.
2. China:
   • Auctions helped drive down prices and diversify the RE mix.
   • Local content rules initially supported local manufacturing but were relaxed in later rounds.
3. Morocco:
   • Wind and solar CSP auctions introduced revenue-sharing models and long-term PPAs.
   • Morocco leveraged public-private partnerships to reduce financial risks.
4. Peru:
   • Auctions were successful in attracting foreign investment, but volumes were often not fully met due to overly low price ceilings.
5. South Africa:
   • Technology-specific auctions and local content rules facilitated deployment, though administrative delays were a challenge.

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Best Practices and Policy Recommendations

1. Type of Auction:
   • Sealed-bid auctions are simple and easy to implement.
   • Descending clock auctions facilitate price discovery but are more complex.
2. Price and Volume Caps:
   • Ceiling prices should not be disclosed to foster competition, but they must be set carefully to avoid unduly restricting participation.
3. Requirements and Compliance:
   • Bidders must meet specific financial, technical, and environmental criteria.
   • Strong compliance rules (penalties for non-compliance) help ensure project delivery.
4. Competition and Local Development:
   • Balancing competition with local industry development is critical.
   • Local content rules can support job creation but must be set in line with market conditions.

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Conclusion

Renewable energy auctions are an effective policy tool for promoting RE deployment in developing countries. By carefully designing auction mechanisms, implementing strong compliance rules, and aligning with national priorities, governments can achieve cost efficiency, diversify energy mixes, and create local economic opportunities.