Within the framework of the Wind Power Action Plan, the EU Commission will provide guidance for Member States to maximise the execution rate of renewable energy projects and include objective, measurable and non-discriminatory non price criteria in renewable energy auctions.Â
Eurelectric, representing more than 3500 European utilities active in power generation, distribution and supply would like to raise the following key considerations:
1 – Careful implementation of non-price criteria (NPCs) to avoid delays, cost increases or even the non application of the criteria:
- A harmonised and predictable application that allows to learn from experience à e., implementing act and pilot auctions.
- Technology specific application à for solar, onshore, offshore wind and even floating offshore wind, hydropower or geothermal. In general, well-designed NCPs will provide greater value in those tenders that allocate a scarce resource, such as seabed leasing, avoiding uncapped negative bidding.
- Simple and focused criteria to avoid over-complexity for developers and for national authorities during the assessment process à one auction, one major objective; resilience where there is production capacity and when the bidder has visibility on the suppliers; use internationally agreed methodologies and develop methodologies for those metrics not standardised yet.
- Legal certainty à the criteria need to be objective, measurable and non-discriminatory to avoid legal challenges and subsequent delays. It shall be ensured that the bidders hold up against their pledges and commitments as long as these are in their control and do not reduce competition.
- Harmonisation à a catalogue of measures, methodologies from the Commission with some degree of flexibility to adapt to local markets. On the offshore wind side, seabed lease and auctions should abide by the same rules (art 20) and not be treated differently.
2 – Avoiding uncapped negative bidding is good for the transition, the supply chain and the customers. Member States should explore alternatives, such as capping payment concessions and considering non-price factors like track record, deliverability, financial robustness, and other credentials to determine concession winners.
3- Incentivising project completion – indexation and penalties. Price indexation at least during construction is crucial, covering risks that would otherwise be factored into bids, leading to cost savings for electricity consumers. Reasonable penalties may also deter non-completion, with exemptions for force majeure and third-party events. But the negative implications should be factored in and alternatives such as a bonus for delivering the project earlier could also be considered.
4 – Bid ceilings to be assessed and updated regularly: consulted upfront with market experts, indexed, aligned with the costs of technology and reflecting the sustainability and resilience non-price criteria (if applied) and communicated well in advance to avoid undersubscription.