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Renewable Energy Auctions Toolkit
Auctions are best practice for procuring least-cost energy. This competitive, transparent process helps countries meet their energy and climate goals and attract investment into their clean energy futures. View the toolkit
USAID is at the forefront of competitive procurement design and implementation, helping developing countries strengthen national energy sectors through increased transparency and greater private sector participation.
Traditionally, electricity generation contracts in developing countries have been quietly negotiated out of the public eye, resulting in bad deals for utilities and their consumers. Competitive procurement forces all potential electricity suppliers to publicly and transparently bid against one another, forcing energy prices lower. As the practice of competitive procurement takes hold in countries around the world, governments are increasingly paying less for electricity and are seeing marked increases in the level of grid-connected renewable energy, demonstrating the increasing economic competitiveness of sources such as wind and solar.
Competitive procurement helps facilitate private investment by giving investors—especially U.S. investors that must be compliant with the Foreign Corrupt Practices Act (FCPA)—confidence that energy projects will be judged transparently and awarded using fair contracting practices. This level of transparency also benefits local consumers and utilities, allowing access to cleaner, less expensive sources of energy.
Record Low Prices
Since 2016, USAID has worked with an extremely diverse group of countries to develop the policy and regulatory environments necessary for instituting competitive electricity procurement. In Mexico, USAID helped the government bring 7 GW of renewable energy online resulting in $8 billion in planned investment, $1 billion of which came from American companies. USAID support also allowed both Kazakhstan and Afghanistan, two countries known for their vested interests and security issues respectively, to hold their first renewable energy competitive procurements. Similar USAID support in Africa has resulted in record low prices for renewable power in Senegal and Zambia.
Competitive procurement can result in prices that more closely reflect drastic changes in technology, financing and other costs. For example, solar PV’s global average price fell by over 70 percent between 2010 and 2017. Similarly, the increasing experience by project developers and manufacturers, combined with a higher familiarity with renewable energy technologies by insurers and multilateral and commercial lenders, brings the renewable energy industry increasingly into the mainstream.
Private Investment Boosts Energy Security in Colombia
Colombia has historically relied on its rivers for cheap and plentiful hydropower for its country’s electricity needs. As hydropower becomes increasingly unreliable due to El Nino, energy diversification has become a critical energy security issue. Fortunately, Colombia is also rich in renewable energy resources with some of the highest wind and solar potential in Latin America. The most important barrier to developing renewable energy is attracting the necessary level of private investment. Competitive procurement provides a solution by offering stable, long-term contracts to generators who in turn compete to deliver the lowest price to the Colombian energy utilities.
In late 2018, USAID helped organize events in Bogota and New York City to showcase the Colombian business opportunity to a network of U.S. and global firms. The Colombian Ministry of Mines and Energy (MME) presented its procurement plans to 90 investors and financial organizations in Bogota and 60 attendees in New York to educate them and increase their interest in bidding in the auction. As a result of USAID support, in less than one year, MME has guaranteed 2,250 MW of installed RE capacity and leveraged over $2B of estimated private investment into Colombia’s energy sector.
USAID Technical Leadership
USAID offers multi-day educational workshops and training opportunities for energy sector stakeholders interested in designing and developing competitive procurement. Experts speak on past renewable energy experience and introduce the legal, financial, and regulatory processes. USAID conducted a workshop in Tanzania in 2016 with participation from the Ministry of Energy and Minerals (MEM) and nine other government agencies. In 2017, USAID brought a delegation from Tanzania to Brazil for a ten-day study tour, which included an auction simulation and visits to the principal stakeholders, government entities, and private sector companies involved in Brazil’s auctions. In 2018, Tanzania announced plans to initiate its first competitive procurement for wind and solar energy.
Featured USAID Implementation Activities
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UPME
Reverse Energy Auction Design Support
USAID is helping Colombia develop policy, regulatory, and business environments to procure renewable energy through auctions. The auction represents an opportunity to bring low-cost renewable energy, while promoting investment in Colombia’s energy sector. Visit the website
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Makpal Abduldinova / USAID
Energy Auctions for Kazakhstan’s Green Economy
Despite being a fossil fuel-based economy with a surplus of energy, Kazakhstan has a successful renewable energy auction program that is transforming its energy sector and diversifying its energy mix. Visit the website
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UPME
Institutional Framework for Auctions
Mexico has implemented a major restructuring of its power sector which, with assistance from USAID, resulted in some of the world’s most competitive renewable energy prices. Visit the website
External Auction Resources
Links to the external resources below are provided for your convenience in further exploring energy auctions. For USAID’s auction resources, please see our Renewable Energy Auctions Toolkit.
Bidding Rules
- AURES (2017). Auctions for Renewable Energy Support (AURES) - Taming the Beast of Competitive Bidding. This final project report discusses major findings and insights regarding auction designs.
- AURES (2017). Developments in Renewable Energy Auctions. Presentations from the final AURES conference on renewable energy auctions, including:
- AURES (2015). A Methodological Note on the Links Between Components for the Assessment of Design Elements in Auctions for RES. This note from the EU’s Auctions for Renewable Energy Support (AURES) project is intended to facilitate the analysis of the contribution of different auction design elements to the success of auctions for renewable energy support (RES).
- AURES (2015). Overview of Design Elements for RES-E Auctions. This report provides a list of different design elements for auctions in order to help policymakers and market participants have a common understanding of terminology and make informed decisions concerning auctions for electricity from renewable energy sources (RES-E).
- AURES (2015). Assessment Criteria for RES-E Auctions. This report gives an overview of relevant assessment criteria for policymakers, as a tool to measure the success of renewable energy auctions.
- BPC (2017). Joint Venture for a 100MW Solar Power Plant Located in Botswana. Botswana Power Corporation (BPC) issues a tender for the establishment of a joint venture for a solar power plant.
- CNE (2017). Regulations for Chile’s 2017 Auction. Chile’s National Energy Commission (CNE) provides the bidding terms (in Spanish) for the 2017 auction.
- COMMESA (2016). RenovAr: Renewable Energy Plan – Argentina 2016-2025. This site by Argentina’s electric wholesale market management company (COMMESA) supporting the country’s renewable energy auctions contains a Bidding Terms and Conditions section (Pliego de Bases y Condiciones) with the official Spanish documents and an unofficial English version.
- DEWA (2017). DEWA Releases RFP for 200MW Solar CSP Power Plant. Dubai Electricity & Water Authority (DEWA) has issued a Request for Proposal (RFP) to all qualified bidders for a 200MW Concentrated Solar Power (CSP) Power Plant, the fourth phase of the Mohammed bin Rashid Al Maktoum Solar Park.
- Ecofys (2013). Design Features of Support Schemes for Renewable Electricity. This report identifies best-practice design features of support schemes for renewable electricity. The analysis focuses on feed-in tariffs (FIT), feed-in premiums (FIP), tenders and quota obligations. Moreover, the report gives selected examples of EU Member States using these different options.
- Energía Estratégica (2018). El Salvador lanza hoy una nueva licitación para desarrollar importantes proyectos de energía renovable. This article (in Spanish) describes the announcement of El Salvador’s National Energy Council (CNE) of a new tender for the supply of electricity to the grid through non-conventional renewable sources.
- GET FiT Zambia (2018). Round 1: 100 MW Solar PV Shortlist Announcement. GET FiT Zambia is the official implementation program for Zambia’s Renewable Energy Feed-in Tariff (REFiT) Strategy.
- GTM (2018). China Takes a Step Closer to Grid Parity With the Introduction of Wind Auctions. This story from Greentech Media (GTM) describes the efforts of China’s National Energy Administration to reduce subsidy pressure on the central government and reach grid parity by 2020.
- Hugo Lucas, Pablo del Río, and Mohamed Youba Sokona (2017). Design and Assessment of Renewable Electricity Auctions in Sub-Saharan Africa. This article published by the Institute of Development Studies identifies the design elements of RES-E auctions in Sub-Saharan Africa (SSA) and assesses their pros and cons with respect to different criteria.
- IRENA (2013). Renewable Energy Auctions in Developing Countries. This report from the International Renewable Energy Agency (IRENA) describes various types and aspects of renewable energy auction schemes, drawing on the actual experiences of five countries: Brazil, China, Morocco, Peru and South Africa.
- KOREM (2019). Kazakhstan Auction Resources. Kazakhstan Electricity and Power Market Operator (KOREM), organizer of auctions for selection of RES projects, provides regulations and documents for auctions.
- Osinergmin (2015). Renewable Energy Information System. This site by Peru's supervisory body for investment in energy and mining (Osinergmin) supporting the country’s renewable energy auctions provides official bidding terms for each auction in Spanish. The fourth auction (Cuarta Subasta RER) provides an unofficial English version of the terms.
- PDO (2018). Amin Solar PV IPP Project (Expression of Interest). Petroleum Development Oman (PDO), owned by the Government of Oman, solicits interest for an independent power project to develop a 100 MW utility scale solar photovoltaic (PV) plant.
- SECI (2018). Solar Energy Corporation of India Requests 2000 MW ISTS-Connected Wind Power Project. Solar Energy Corporation of India ltd (SECI), a Government of India enterprise under India’s Ministry of New and Renewable Energy, requests submissions for setting up of wind power projects in India on “Build Own Operate” basis to sell the wind power to the SECI.
- World Bank (2011). Electricity Auctions: An Overview of Efficient Practices. This report assesses the potential of electricity contract auctions as a procurement option for the World Bank's client countries. It focuses on the role of auctions of electricity contracts designed to expand and retain existing generation capacity. It is not meant to be a 'how-to' manual. Rather, it highlights some major issues and options that need to be taken into account when a country considers moving towards competitive electricity procurement through the introduction of electricity auctions.
Case Studies
- Google (2019). Case Study: Accelerating Renewable Energy Purchasing through Auctions (PDF 535K). Google ran four auctions simultaneously in the ERCOT and PJM grid regions in the United States, and Sweden and Finland in Europe, with standardized global power purchase agreements, resulting in ten signed renewable energy agreements comprising more than 1.2 gigawatts of capacity.
- AURES (2016-2017). Report Series: “Auctions for Renewable Energy Support: Instruments and Lessons Learnt”
- AURES (2017). Developments in Renewable Energy Auctions. Presentations from the final AURES conference on renewable energy auctions, including:
- AURES (2017). Hybrids and Transitions. This report examines how hybrid auction schemes can combine auction and non-auction based mechanisms, and the transition processes from existing support policies to auction-based support schemes. Therefore, we analyse real-life examples in the context of four country case studies.
- AURES (2017). Model-Based Analysis of Specific Cases. Findings from game-theoretic modelling of auction schemes in Germany, UK and Denmark.
- AURES (2017). Model-Based and Qualitative Analysis of the Danish Auction Scheme. How to design the parameters for a Danish multi-unit auction scheme yielding the most favourable outcomes and achieving the policy goals envisaged.
- AURES (2017). Status for implementation of auctions in Spain. This news article describes how the Spanish auction based support scheme goes into round two and three with 3000 MW auctioned in May 2017 and 3000 MW to be auctioned before summer.
- GTM (2017). Chile’s Latest Auction Signals Growing Interest in Solar-Plus-Storage. This story from Greentech Media (GTM) on Chile’s auction illustrates the growing competition among solar developers in the Chilean market, with at least one auction bidder planning to sell PV power at night.
- Hugo Lucas, Pablo del Río, and Mohamed Youba Sokona (2017). Design and Assessment of Renewable Electricity Auctions in Sub-Saharan Africa. This article published by the Institute of Development Studies identifies the design elements of RES-E auctions in Sub-Saharan Africa (SSA) and assesses their pros and cons with respect to different criteria.
- IRENA (2017). Renewable Energy Auctions: Analysing 2016. This study analyses the results of renewable energy auctions globally. It provides an overview of the most recent renewable energy auctions, analyses trends in auction prices and designs, and provides an in-depth overview of the interesting experiences and results. This analysis is meant to provide policymakers with a thorough understanding of the dynamics of auctions to support their design in particular, and to make informed decisions regarding the choice of policy instruments in general.
- IRENA (2018). Renewable Energy Auctions: Cases from Sub-Saharan Africa. This report from the International Renewable Energy Agency (IRENA) analyses the design details and price outcomes from three renewable energy auctions in SSA: Uganda (Get FiT), South Africa (Renewable Energy Independent Power Producer Procurement Programme, or REIPPPP) and Zambia (Scaling Solar). This analysis aims to unearth lessons and recommendations that can inform good auction design in the context of emerging market economies.
- IRENA (2013). Renewable Energy Auctions in Developing Countries. This report from the International Renewable Energy Agency (IRENA) describes various types and aspects of renewable energy auction schemes, drawing on the actual experiences of five countries: Brazil, China, Morocco, Peru and South Africa.
- ScienceDirect (2016). Designing Renewable Energy Auctions for India: Managing Risks to Maximize Deployment and Cost-Effectiveness. The authors of this paper examined 20 renewable energy auctions in India and elsewhere to determine their effectiveness, and how auctions can be designed to achieve India’s renewable energy targets.
- World Bank (2018). Argentina aprovecha su potencial en energía renovable – Argentina Taps Its Renewable Energy Potential. This success story profiles a joint approach coordinated by the World Bank and the IFC to help design and structure two auctions in 2016 aiming to attract 1,000 megawatts of new projects, ending up with bids for more than six times that amount, a signal of confidence from local and international investors.
- World Bank (2011). Electricity Auctions: An Overview of Efficient Practices. This report assesses the potential of electricity contract auctions as a procurement option for the World Bank's client countries. It focuses on the role of auctions of electricity contracts designed to expand and retain existing generation capacity. It is not meant to be a 'how-to' manual. Rather, it highlights some major issues and options that need to be taken into account when a country considers moving towards competitive electricity procurement through the introduction of electricity auctions.
- World Bank (2014). Performance of Renewable Energy Auctions: Experience in Brazil, China and India. This paper considers the design and performance of auction mechanisms used to deploy renewable energy in three emerging economies. The analysis focuses on the countries' experience in various dimensions, including price reductions, bidding dynamics, coordination with transmission planning, risk allocation strategies, and the issue of domestic content.
- World Bank (2015). Promoting Solar Energy through Auctions: The Case of Uganda. This brief analyzes Uganda’s GET FiT Solar Facility, the first donor-subsidized competitive bidding program for grid connected solar photovoltaic (PV) generation in Sub-Saharan Africa. Specifically this note covers the bidding process and lessons learned, for possible replication in other developing countries in Sub-Saharan Africa and elsewhere.
- World Bank (2018). Time to Shine: Introducing Armenia’s Solar Industry. The novel Masrik-1 solar power plant is set to become a reality.
Last updated: May 27, 2021
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