Renewable Energy Auctions in Developing Countries Acknowledgement (original) (raw)
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Renewable Energy Auctions and Tenders: How good are they?
2015
This paper analyses the performance of two cases of renewable energy (RE) auction/tender systems in an effort to contribute to the evaluation of RE auction/tender systems and to study best practice in their delivery of RE projects. This is done by comparing regimes in different settings, one concerned with Danish offshore wind development, the other concerned with renewable energy development in South Africa. It is found that regulatory factors which promote certainty in deployment, including measures to ensure that projects achieve grid connection, are important in assuring delivery of the programmes. However cost reductions that are associated with renewable energy auctions are not caused mainly by the auction systems themselves, but rather are associated with general declines in the costs of renewable energy technologies. Moreover, the effect of renewable energy auctions systems may be more concerned with limiting renewable energy deployment rather than reducing the costs of ener...
Auctions for renewable energy support - Taming the beast of competitive bidding
2017
Scope Auction volume Periodicity (number and frequency of rounds) Target achievement safeguards (dealing with amounts not awarded/built) Penalties Penalising non-compliance Penalising delays Other Seller concentration rules Information provision Web-based vs. in-person Secondary market Diversity Technological diversity Size diversity Geographical diversity Actor diversity Other diversity types Prequalification criteria Technical requirements Documentation requirements Preliminary licences Deposits and other guarantees Financial capability requirements Experience Support Remuneration type (energy or capacity-related) Duration of contract Updating of remuneration over time Other Local content rules Deadlines and grace periods Auction format Single-item Multi-item (homogenous or heterogeneous) Auction type Sealed-bid (static auctions) Descending clock (dynamic auctions) Hybrid designs Pricing rule Pay-as-bid (in single-item auctions: first price) Vickrey (in single-item auctions: second price) Uniform price Price limits Price ceilings Minimum prices
Performance of Renewable Energy Auctions: Experience in Brazil, China and India
Policy Research Working Papers, 2014
The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.
Appropriate design of auctions for renewable energy support – Prequalifications and penalties
Energy Policy, 2017
Auctions are a promising tool to accomplish renewable energy support (RES). However, they involve diverse risks for the auctioneer and the bidders. The major risk for the auctioneerwith respect to the expansion target and the acceptance of auctions for RES in generalis the risk of non-realization: awarded bidders do not realize their projects. The main reasons are bidders' uncertainties concerning their project costs. The auctioneer can reduce the non-realization risk by taking various measures. The most discussed and implemented measures are financial and physical prequalifications and penalties. An evaluation of these measures has relevant implications for an appropriate auctions design for RES. The non-realization option induces lower bids. A suitable combination of financial and physical prequalifications can reduce the non-realization risk significantly, however, involves sunk costs. Counterintuitively, first-price auction and second-price auction lead to different expected award prices and different realization probabilities. Penalties bear a high risk of inefficient auction outcomes. The appropriate parametrization and combination of the measures is challenging. Under consideration of all implications, we recommend high financial and adjusted physical prequalifications to achieve a sufficiently high realization rate while maintaining efficiency.
Renewable energy auctions in South Africa outshine feed-in tariffs
Energy Science & Engineering
South Africa's Renewable Energy Independent Power Producer Procurement Program has run four competitive tenders/auctions since 2011, which have seen US$19 billion in private investment, and electricity prices of wind power falling by 46% and solar PV electricity prices by 71%, in nominal terms. Competitive tenders were introduced after an unsuccessful attempt to implement feed-in tariffs. The tenders incorporated standard, nonnegotiable contract documents, including 20-year Power Purchase Agreements and an Implementation Agreement whereby the Government of South Africa back-stops IPP payments by the national utility, Eskom. All of these projects have reached financial close to date and some are already delivering power to the grid. The financing success has been due in part to the requirements for commercial banks to undertake a thorough due diligence of projects prior to bids being offered. The details of the policy package described may be useful for other policy makers in countries developing policies for renewable energy deployment.
The need for a timely transition to renewables has been described by commentators as one of ‘Herculean dimensions’. Although public intervention in electricity markets is now broadly accepted, there is growing recognition of the need for government intrusion to be targeted and proportionate, minimising market distortions. This essay explores a number of obstacles to renewable energy deployment, as well as various available policy mechanisms. The essay then focuses on the use of competitive bidding arrangements to award long-term contracts, by reference to the case study of Brazil, where the method has been employed extensively over the past decade to facilitate development in non-conventional renewable energy sources. The benefits of this approach vis-à-vis other regulatory mechanisms are considered, as well as the potential risks and key design features of auction schemes. Additionally, the essay outlines a Grattan Institute proposal for the use of reverse auctions in Australia and considers how such a proposal might fit within Australia’s overall regulatory framework. Finally, it describes the Australian Capital Territory’s reverse auction scheme, which is already providing promising results for the deployment of wind power in Australia.
Auctions for the Support of Renewables: When and How?
ULB Institutional Repository, 2015
The objective of this report is to provide a conceptual background to identify when competitive bidding mechanisms are useful and how they can be designed to deliver their full potential in the context of support for renewables. The first part of the report clarifies the potential role of auctions in pinning down support and determining which technologies to support, and reviews general principles of policy design that apply whether or not aid is granted through a competitive mechanism. The second part of the report describes the different design dimensions of auctions and their contributions to auction success. Case studies are provided to illustrate these concepts. The author thanks Stefan Bergheimer, Luisa Dressler and François Koulischer for excellent research assistance, and Antonio Estache for feedback on an earlier draft. I have also greatly benefited from discussions, questions and suggestions from several staff members of DG Competition.
Auctions for Renewable Energy Support II – First insights and results of the Horizon 2020 project
2021
The Horizon2020 project AURES II aims at ensuring the effective implementation of auctions for renewable energies in the EU Member States (MS). In recent years, auction schemes for the allocation of support for renewable electricity sources (RES) have been advancing rapidly across Europe. Auctions are considered to have brought down support levels and increased planning capability for RES deployment and state budgets. In some unfortunate cases, they have, however, also resulted in delayed or unrealised projects and increased uncertainty for project developers. A variety of auction designs are still being tested and introduced in EU MS, as well as foreseen by European legislation. Therefore, there is still a need for further assessment and improvement of national auction design and implementation to ensure the future success of RES auctions in Europe. Applying different qualitative and quantitative methods in the various work packages (WPs), the AURES II project partners have already...