RES developers face expenses for project pre-development. These include measuring the availability of the resource (e.g. wind speeds, solar irradiation), environmental impact assessments, geological surveys, grid connection issues, and more. Depending on how the auction is designed, auctioneers must pre-develop their project to differing degrees before they can enter it into an auction.

The costs for pre-development are sunk costs, meaning that they will not be recovered by the project developer. This is obvious in the case of projects which are not awarded: The installation will not be built, and the pre-development was thus in vain. However, the same can be true even of awarded projects: Assuming sufficient competition, rational bidders will not include past costs in the calculation of their bid price. Even auction winners therefore do not recover their pre-development costs.