Global renewables growth hindered by current auction policies – study

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on reddit
Reddit
Share on email
Email
Image: IRENA.

Global reliance on auctions is thwarting the growth of renewables and failing to provide fair access to the market for small-scale industry players, new research suggests.

A wider policy mix, therefore, is “urgently required” to allow for an expansion of renewables, according to the study commissioned by think tanks Energy Watch Group, World Future Council, Global Renewables Congress and Haleakala Stiftung.

The report, which is based on an analysis of more than 20 markets, says auctions have a “poor track record” in achieving countries’ deployment targets, in part due to them being undersubscribed as well as project delays or cancellations.

Meanwhile, economies of scale favouring large projects, the need to bear the sunk costs of unsuccessfully bid projects and the costs of capital are said to create competitive advantages for larger actors, to the detriment of new players looking to break into the market.

“The findings of the report clearly show that auctions are a crucial factor hindering the exponential growth of renewables,” said Energy Watch Group president Hans-Josef Fell. “This alarming trend jeopardises international governments’ compliance with the climate targets agreed in Paris.”

Among the countries that have carried out renewables auctions in 2020 are Germany, France, India, Poland and Portugal, with the latter receiving a record tariff of US$0.0131/kWh. Next year will see Spain, Chile, Colombia and the UK, among others, carry out auctions to help drive clean energy project development.

The study says that sufficient time has passed since auctions were first introduced in a large number of countries, meaning conclusions can now be drawn from their results.

While acknowledging that they have become an “important ingredient in the renewable energy policy toolkit”, the report says auctions often exclude small and medium-sized projects, which, if constructed, can provide a boost for local employment and regional development. It adds that experience from around the world shows that auctions “have been broadly unsuccessful” at encouraging a range of project sizes simultaneously.

Anna Leidreiter, project lead global renewables congress at World Future Council, said a political framework that opens up the energy market for new players is needed. “This study shows that auctions alone cannot serve this purpose.”

Depending on the market segment, the report authors call for feed-in tariffs or feed-in premiums for small and medium-sized projects, the use of self-consumption policies for very small-scale projects and for the continued use of auctions for large-scale projects.

Read Next

November 26, 2021
Portugal has launched its latest solar auction that is set to allocate 262MW of floating PV to be installed at seven dams across the country.
November 24, 2021
The US International Trade Commission has recommended that the Section 201 safeguard tariffs on solar cells and modules be extended.
November 22, 2021
Greta Thunberg’s verdict remains unchanged, but is the climate activist too pessimistic on the Glasgow Climate Pact, or is she right to dismiss the agreement?
November 22, 2021
The US House of Representatives has passed Joe Biden’s Build Back Better act, which now moves to the Senate where negotiations will continue over the legislation that includes clean energy and climate investments totalling US$555 billion.
PV Tech Premium
November 17, 2021
Following the US Customs and Border Protection's updated guidance on its WRO on silicon metal products, PV Tech Premium speaks to legal experts on what’s changed for solar imports.
November 16, 2021
An exemption for bifacial solar panels from Section 201 tariffs in the US has been reinstated after a decision passed down by the US Court of International Trade (CIT).

Subscribe to Newsletter

Upcoming Events

Solar Media Events
December 1, 2021
Solar Media Events
February 1, 2022
London, UK
Solar Media Events
February 23, 2022
London, UK
Solar Media Events
March 23, 2022
Austin, Texas, USA
Solar Media Events
March 29, 2022
Lisbon, Portugal

Cyber Monday Flash Sale – 50% off our subscriptions

24 hours only