An auction is a process in which a good or several goods are offered up for bidding. For the support of electricity from renewable energies (RES-E), we consider so-called procurement auctions. That is, an auctioneer will buy the good (renewable electricity) from the bidder(s) offering the best bid, e.g. lowest support level.

Auctions for RES-E support address several policy goals:

  1. control over timing and quantity of renewables deployment;
  2. transparent market prices for renewable support;
  3. competitive pressure among renewables projects, and thus lower policy support costs.

Historical experiences with auctions have shown that auctions can be successfully applied to increase the cost-effectiveness of renewables support, but also that the achieved performance is very sensitive to concrete design options. 

To get a deeper knowledge on auctions, check our auction Tools:

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