Renewable energy auctions are on the rise worldwide, becoming an important tool for procuring clean electricity. By encouraging competition, auctions have helped drive down renewable power prices and speed up the global energy transition. However, many of today’s auction models continue to disproportionately allocate risks between private sector and host government, burdening developing countries.
In a new report, the International Renewable Energy Agency (IRENA) has examined how auction frameworks can be improved to better balance competing objectives. The report was published in partnership with the Sustainable Renewables Risk Mitigation (SRMI) Initiative, including the World Bank, the European Bank for Reconstruction and Development (EBRD), Power Futures Lab at the University of Cape Town and GET.transform.
The findings show ways to maintain low prices and high project delivery rates while reducing macroeconomic risks, limiting public debt exposure and strengthening local value creation. The paper highlights how current approaches often shift risk away from private investors and onto governments, underscoring the need for more equitable risk-sharing arrangements.
The report concludes that well-designed auctions can achieve far more than low-cost renewable power. By evolving contractual structures and broadening evaluation criteria, future auctions can help developing countries build resilient renewable energy sectors while supporting wider economic and development goals.
Download the full study.
