Worth the wait: How South Africa's renewable energy auctions perform compared to Europe's leading countries. (July 2022)

• Record Type: Journal Article
• Authors: Kitzing, Lena; Siddique, Muhammad Bilal; Nygaard, Ivan; Kruger, Wikus
• Is Part Of: Energy policy. Volume 166(2022)
• Publication Date: 2022-07
• Subjects: Competitive electricity procurement -- Tender design -- Global North-South comparison -- Wind energy -- Solar photovoltaics -- Sustainable energy transition; Energy policy -- Periodicals; Politique énergétique -- Périodiques; Electronic journals; 333.79
• DOI: 10.1016/j.enpol.2022.112999
• Languages: English
• ISSNs: 0301-4215

Abstract

Abstract: Auctions for renewable energy support allocation are on a triumphant global advance. We compare performance of renewable energy auctions in terms of effectiveness (realisation rate and period) and efficiency (price outcomes) from two world regions: South Africa and European countries (Germany, France, the Netherlands). We develop an assessment framework for compliance incentivisation in auction design, covering qualification criteria, penalties, and compliance monitoring. We find that a 100% realisation rate in South Africa is connected to a strong compliance package, while European countries have moderate realisation rates (23%–87%) with relatively lenient compliance packages. We observe that realisation periods are correlated with project size rather than granted realisation period. Although South African projects generally have longer realisation periods (34 months for PV and 40 months for onshore wind) than European projects (16.5–30 months for PV and 19–25 months for onshore wind), they perform comparably considering that they are 10–13 times larger. Comparing average auction prices with equivalent technology-specific LCOE estimates, we find a general convergence towards the global average, with South Africa having the sharpest price decline (75% PV and 54% onshore wind), albeit starting from the highest level. Our findings, especially on importance of compliance incentivisation and weak impact of granted realisation periods, are valid across world regions and can support policymakers everywhere in designing effective and efficient renewable energy auctions. Highlights: Renewable energy auction performance analysed in two world regions. Results analysed for effectiveness (realisation rate, period) and efficiency (price). Framework developed to assess effect of compliance incentivisation. South African achieve highest realisation rate with strong compliance package. Auctions can perform well in countries with emerging renewable energy markets.