Renewable energy auctions
A growing number of countries are shifting towards renewable energy auctions for procurement of electricity generation capacity. Transparent, well-designed and implemented calls for tenders introduce competition in the markets, leading to remarkably low prices. The sharp reduction in the prices of renewable energy around the world, in many cases cheaper than conventional power, has been attributed to a large extent to the implementation of auctions. In 2018, 48 countries across the globe held auctions for renewable energy technologies.
Ethiopian solar auctions
Auctions are proving to be one of the most successful policy instruments for renewable energy in Africa. Ethiopia recently concluded auctions for solar power projects of 250 MW capacity with a lowest bid of US$0.02526 per kWh offered by Saudi Arabia based developer ACWA Power. This rate is the lowest price for solar in Africa. These low prices were enabled by a carefully designed investment framework implemented by the government of Ethiopia and the World Bank, under the Scaling Solar programme. The International Finance Corporation (IFC) helped in carrying out the technical, financial, and social feasibility studies, as well as the design of the auctions. A financing proposal, payment guarantee and insurance details were offered as part of the tenders to reduce the risk exposure of potential bidders. This played a significant role in attracting 12 bidders.