/BRUSSELS, BELGIUM, August 27, 2025, 11:30 CET, RENEWABLE MARKET WATCH™/
Renewable energy is growing quickly, largely due to auctions conducted by Member States. This rapid growth is also aided by the decreasing costs of renewable sources, particularly solar and wind energy. To meet the EU’s binding target of a 42.5% share of renewable energy in gross final energy consumption by 2030, the installed capacity of these two technologies must more than double.
The European Commission, as a key driver of the clean energy transition, has made significant efforts to accelerate this transition through the design of auctions for renewable energy projects. These efforts are part of the Commission’s broader strategy to combat climate change and promote sustainable energy practices.
Despite the increasing market-based deployment of renewable energy, it is still largely guided by support schemes, which are government initiatives or policies that provide financial incentives or other forms of support to encourage the development of renewable energy projects. By 2024, 25 Member States were either implementing or planning to implement auctions to competitively determine the financial support levels for renewable energy technologies. These auctions have played a crucial role in optimising public support.
Below, we clearly outline essential principles that apply to all renewable energy auctions, and these should be thoroughly considered in their design:
Regardless of the auction design chosen, it should facilitate the rapid, efficient, and sustainable deployment of renewable energy across the EU. This deployment is not just a goal, but a necessity for achieving the EU’s ambitious decarbonisation goals. Renewable energy projects can be pursued with either public or private support. It is important that auction designs do not undermine private investments, as the market will need to contribute significantly to the funding required to meet the EU’s objectives. For instance, in the case of offshore wind energy, Member States auction the rights to exploit the seabed. Projects may receive public support or be financed through power purchase agreements and direct sales to electricity markets. Encouraging collaboration between these two funding avenues is crucial to maximising renewable energy deployment.
To achieve an efficient auction outcome, it is crucial to design the auction in a way that promotes a competitive bidding process. In accordance with the Renewable Energy Directive (RED)22, support for electricity generated from renewable sources should be provided in an open, transparent, competitive, non-discriminatory, and cost-effective manner. This approach is further elaborated in the CEEAG and within Union legislation concerning electricity market design.
The legal certainty of the auction process is crucial to achieving the intended objectives. Without legal certainty, there is a higher risk of legal challenges, which can lead to delays and decreased confidence among investors. Ultimately, this uncertainty may threaten the deployment of renewable energy sources.
The simplicity of the tender design minimises pressure and implementation challenges for both the tendering authority and the project developers, as well as the supply chain. By keeping the design simple, it mitigates the risk of excluding less experienced project developers, which helps maintain competition in the bidding process. Additionally, having straightforward tender rules and clear guidelines reduces the likelihood of legal challenges and, in turn, lowers public administrative costs. This approach is particularly relevant in situations where tenders are newly introduced or when the market is still developing.
To successfully implement an auction, it is essential to incorporate design elements that align with the current market conditions. This requires accurately interpreting market signals and trends. Engaging market participants and experts effectively in drafting the auction specifications is not just a formality but a crucial step. Their insights and expertise are integral to ensuring that the auction’s objectives—such as project realisation, the use of non-price criteria, or bid ceilings—are realistic and conducive to a competitive bidding process.
The diverse auction design features across various Member States raise transaction costs for the deployment of renewable energy. This results in more expensive products and projects. Additionally, these differences may obstruct the achievement of the auction’s intended objectives. Therefore, it is crucial to align the auction design to minimise transaction costs, ensuring efficiency and cost-effectiveness in the auction process.
For more information and answers to your questions about the Irish and European renewable energy market and corporate PPA market and related content, you may read here: Europe Solar Photovoltaic (PV) Market Outlook 2025 ÷ 2034 and Europe Corporate Renewable PPA Market Report 2025 ÷ 2034
For a better understanding of the benefits of using our reports, you may read here: Benefit List – Reports of Renewable Market Watch – 2025
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