20211014-IRENA-Renewable_energy_auctions_Status_and_trends_beyond_price_104页_7mb

Renewable Energy Auctions Status and Trends Beyond Price (IRENA 2019)
Introduction: Renewable energy auctions have become a key policy tool for procuring electricity at competitive prices while supporting broader development goals. By the end of 2018, 106 countries had adopted auctions, up from 8 in 2005. The global weighted average price for solar PV dropped by 77% to USD 58.7/MWh between 2010 and 2018, while onshore wind prices decreased 36% to USD 47/MWh. This report explores how auctions can achieve objectives beyond price reduction, ensuring timely project completion, supporting VRE integration, and promoting a just transition.

1. Recent Trends

• Global Adoption: 55 countries used auctions in 2017–2018, tripling the number from 2016. Africa and Asia were hotspots for new entrants.
• Price Drivers: Falling panel costs, increased bidder experience, and policy support drove record-low prices (e.g., Mexico's USD 18.6/MWh solar auction). However, currency risks and regulatory changes in some nations (e.g., India) offset gains.
• Design Flexibility: Auctions evolved from technology-neutral to technology-specific designs, blending strategies for VRE (e.g., Morocco's hybrid CSP-PV projects). This allowed national goals, like local content or community inclusion, to be incorporated.

2. Ensuring Timely Project Completion

• Challenges: Projects in Germany, India, and Mexico faced delays due to permitting bottlenecks, grid access issues, and underbuilding. For example, Japan's cancellations (2017 auction) resulted from undisclosed ceiling prices.
• Solutions: Clearer auction schedules, committed volumes, and robust compliance rules (e.g., completion bonds in Brazil/Liberia) improved timelines. Japan's adjustment mechanisms penalized delays with reduced contracts.

3. Supporting VRE Integration

• Technologies: Solar and wind remain dominant (97% of auction volume), but VRE requires auction design to mitigate variability. Options include:
  • System-Friendly Projects: Project-based strategies in Morocco/Ouarzazate clustered renewable development around grid constraints.
  • Dynamic Strategies: Quantity/adjustment-based limits (e.g., Kazakhstan's zone-specific auctions) and adjustment factors (Germany's reference yield model) incentivized alignment with system needs.
  • Price-Based Instruments: Finland’s pay-as-bid models rewarded flexibility, while Mexico's locational adjustments distributed risk.

4. Promoting a Just and Inclusive Transition

• Localized Benefits: Policies ensured job creation, local industry growth, and community ownership. Morocco’s Noor complex trained 6,430 locals and employed 70% of workers in host communities, while South Africa’s REIPPPP exceeded local equity targets.
• Small Player Inclusion: Auctions in India (e.g., RVAC size limits) and Japan's reduced minimum project size fostered diverse participation. Exceptions (Germany’s CO wind incentives) initially boosted community projects but led to market distortions.
• Gender and Diversity: South Africa’s audits showed women lagging in O&M roles; auction design should balance barriers and incentives for equitable labor distribution.

Key Recommendations

• Trade-offs in Design: Auctions should prioritize modular demand, qualification ease, and risk allocation to minimize competition loss while enforcing compliance.
• Contextual Adaptation: Adjust strategies based on sector maturity; e.g., early-stage VRE requires explicit flexibility, while mature sectors leverage market mechanisms.
• Governance and Coordination: Effective auction outcomes depend on integrated policies (e.g., transmission planning), local workforce readiness, and cross-sectoral alignment for just transitions.

Forward Look

IRENA will continue developing tools, including guides for cost-effective job creation and auction designs for storage, to address evolving renewable economies. Governments must balance efficiency with equity to maximize societal benefits from the transition.