EU endorses technology-specific renewable energy auctions

New EU state aid guidelines allow governments to hold technology-specific auctions and endorse revenue stabilisation mechanisms, such as two-sided contract for difference tenders (CfDs).

The guidelines effectively confirm current practices, as auctions are technology-specific in most countries. They also call for governments to include non-price criteria in national wind power auctions and enable direct support for pilot and demonstration projects, as well as renewable hydrogen and storage projects.

The new measures that the European Commission issued this week need no further approvals and are due to come into force in the first quarter of 2022. Member states will have a two-year transition period to adjust their national support frameworks to the new guidelines.

The new guidelines set out measures governments can take to grant state aid in line with internal market rules.

Industry body WindEurope described technology-specific auctions and two-sided CfDs as “pre-conditions for the accelerated deployment of wind energy towards climate neutrality”.

It added that complementary technologies such as wind and solar needed to scale up in parallel. Having them compete in the same auctions was therefore counterproductive, WindEurope argued.

Price will continue to be the lead criterion for allocating public support to wind farms, but the Commission will allow for up to 30% of non-price-based criteria to be introduced to national auctions. Chief policy officer at WindEurope, Pierre Tardieu, suggested such qualitative criteria could include sustainability measures, system integration or activation of the economy.

With storage and renewable hydrogen projects now eligible for support, WindEurope urged the EU to help close the cost gap between fossil and renewable hydrogen and accelerate the scaling up of electrolysers.

Pilot and demonstration projects can receive state aid directly, outside of tenders, provided they use turbines with ratings of more than 6MW.

During the press conference on the new guidelines, European commissioner for competition, Margrethe Vestager, reiterated the Commission’s position on the need to rapidly ramp up the share of renewables in the EU energy mix. “The faster we get to renewables, the less reliant we are on price spikes of imported fossil fuels”, she said.