RENEWABLE ENERGY AUCTIONS IN AFRICA – ENERGY & ECONOMIC GROWTH APPLIED RESEARCH PROGRAMME (UKAID)

Improving the design and implementation of renewable energy auctions in Sub-Saharan Africa to accelerate investment in clean energy technologies.

Recent years have seen record levels of renewable electricity being procured and the lowest ever prices recorded for long-term renewable energy contracts. This trend in renewable energy investment and costs is in large part driven by the rise of auctions – interchangeably referred to as competitive tenders or bids – for long-term contracts between Independent Power Projects and off-takers, typically the national or local utility. Auctions, although quite recent, have already delivered more investment in renewables at lower prices than any other procurement or contracting method for the region.

Many African countries have struggled to successfully address the risks and costs involved with this procurement method, resulting in sub-optimal outcomes. There is an important need to learn from and distil current experiences with renewable energy auctions for the African context.

The specific objectives of the study are to:

  • Improve our understanding of renewable energy auction design choices, de-risking mechanisms, implementation modalities and associated outcomes in Sub-Saharan Africa.
  • Link research on renewable energy auctions in different world regions for the benefit of Sub-Saharan Africa.
  • Develop and apply a coherent analytical framework for renewable energy auctions across different market segments, allowing for comparison and identification of appropriate lessons.

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