In an article in the Italian newspaper Quotidiano Energia, NERA Senior Consultants Marco Schönborn, Alon Carmel, and Principal Dominik Hübler discuss recent developments in auctions for renewables across Europe and lessons for Italy, in particular against the background of Ministerial Decree (DM 23 June 2016), which spelled out the rules for new auctions in Italy.

Auctions have grown in popularity across Europe, as they can be used to support the expansion of renewables, while minimizing costs. The UK introduced renewable subsidy auctions in 2014. In Germany, auctions for solar photovoltaic (PV) energy have only been introduced recently and are about to be rolled out across different types of renewables.

The experience so far in the UK and Germany—along with a growing list of other countries, including the Netherlands and Denmark—shows that auctions can indeed be useful in keeping costs under control (although care must be taken to make sure that projects will be delivered). Auctions could be “plain vanilla,” but in practice, policy-makers may create different pots and draw up complicated rules to ultimately benefit one type of renewable project over another. This desire to micro-manage auctions contrasts with the European goal of running more technology- and geography-neutral auctions to drive competition and lower costs. In any case, despite the occasional hiccup, auctions are not about to go away, and they present opportunities for smart bidders.

Note: The original article is in Italian.