Open, transparent, and competitive renewable energy procurement, coupled with declining prices for solar and wind technologies, has facilitated billions of dollars of investment at record low prices. According to the Renewables 2020 Global Status Report, 109 countries around the world had held renewable energy auctions by 2019, up from 98 in 2018. Worldwide, auctions have become an emerging best practice to procure least-cost energy.
USAID is at the forefront of energy auction design and implementation, helping developing countries strengthen their energy sectors through increased transparency and greater private sector participation. Regardless of the maturity of a country’s renewable energy market, auctions can be a powerful tool to scale up renewable energy through enterprise-driven development.
In an auction, a government issues a tender inviting energy providers to bid their lowest price for a fixed amount of energy. With proper design and implementation, auctions can dramatically reduce the cost of energy, increase the transparency of public procurement, and facilitate private sector investment in the energy sector.
In today’s rapidly evolving renewable energy marketplace, it can be challenging to keep track of current best practices in renewable energy policy, innovations, and market trends. USAID launched the Renewable Energy Auction Toolkit, a new resource to help policymakers, international development professionals, and energy stakeholders design and implement successful energy auctions. The Renewable Energy Auction Toolkit is a one-stop shop for the latest energy auction white papers, guides, training materials, case studies, and sample auction documents.
Key resources in USAID’s Renewable Energy Auction Toolkit include:
Renewable energy auctions allow policymakers to procure clean energy at competitive prices by assisting in price discovery and reducing windfall profits for power producers.
This policymaker’s guide introduces key auction design concepts for energy ministries, utilities, regulators, and other stakeholders who make decisions on the design of renewable energy auctions.
This fact sheet identifies some common stages of design and implementation that auction programs move through as they mature and is based on experience from 800 renewable energy auctions in 61 countries.
This white paper examines challenges to grid integration, such as the timing of variable renewable energy (VRE) generation and energy demand, the intermittency of VRE generation (its quality), and the physical distance between VRE generation and demand centers (its location). The white paper also presents system-friendly design solutions to address grid integration challenges and to ensure that a given generation technology reduces relative system costs for electricity supply.
USAID provides a range of webinars and training materials on auction design, bidding simulations, and advanced design elements. Trainings draw on USAID’s experience supporting auctions globally, including in Afghanistan, Colombia, El Salvador, India, Kazakhstan, and Mexico. USAID’s work also draws on additional insights from sub-Saharan Africa gained through Power Africa’s support to the International Finance Corporation’s Scaling Solar initiative in Ethiopia, Senegal, and Zambia.
Energy auctions have emerged as the best practice for procuring least-cost energy. Visit usaid.gov/energy/auctions for more information and follow the conversation on social media at #RECompetes.
Sarah Lawson is a senior energy analyst at USAID. She co-manages the Scaling Up Renewable Energy (SURE) project and the National Renewable Energy Labs Interagency Agreement covering grid integration. She has served in nine countries with USAID supporting energy projects. Sarah joined the Agency as a Presidential Management Fellow. She has a M.A. in Energy Policy from Johns Hopkins University School of Advanced International Studies. For more information on USAID energy projects, visit https://www.usaid.gov/energy/.
Araí Monteforte is the chief of party for SURE, a USAID project that helps partner countries plan, procure, and integrate renewable energy. SURE supports countries on their journey to self-reliance by strengthening strategic energy planning, grid integration, competitive procurement, renewable energy zones, and smart incentives. Araí has a M.A. in Energy Policy from Johns Hopkins University School of Advanced International Studies and a M.S. in Reliability and Quality Engineering from the University of Arizona. For more information on SURE, visit https://www.usaid.gov/energy/scaling-renewables.