Preliminary results on the status and patterns of renewable energy auctions were given in the latest study by the International Renewable Energy Agency (IRENA).
The report –produced for the 17th Council of IRENA in June 2019–details preliminary findings from the next big auction analysis of IRENA, temporarily called Renewable Energy Auctions ?
A study focus will be on how auctions can be designed to achieve goals beyond price stability. Auctions planned creatively will help achieve specific nation targets, in addition to providing energy at the cheapest price possible. These objectives could include incorporating high shares of variable renewable energy into the grid; increasing solar and wind power, in specific; guaranteeing greater involvement of groups or other new and small players and maximizing the socio-economic benefits of renewable energy. In contrast to such complex priorities, achieving prompt completion of the project remains an overriding objective.
Roughly 50 countries utilized auctions in the 2017-2018 period to purchase renewable-based electricity, increasing the number of countries that have ever hosted a renewable-energy auction to 100 by 2019. Nearly half of the 50 countries had no prior auction knowledge (hereinafter referred to as newcomers); they were probably driven by the reported success of auctions in other markets in achieving cheap prices. The use of auctions continues to increase, owing mainly to their potential to expose competitive prices and their versatility of structure and their vulnerability to adapting to country-specific conditions and goals
Many renewable energy auctions are still focused on intelligent technologies for power generation. In 2017-2018, an estimated amount of 97.5 GW of energy was auctioned, with solar photovoltaic (PV) and onshore wind contributing more than half and almost a quarter of the total volume, respectively. Offshore wind has seen a significant increase in volume, and new countries have recently held auctions of concentrated solar energy (CSP).
No, where geothermal energy can be used as a guide in the study. Why is it? Well, it's easy. Auction schemes rely on cost alone on the premise that this will help lower prices in the country for households and businesses. The case is actually more complex. They may provide cheap prices on paper with the intermittency of solar and wind, but sadly not at night or on days when there is no wind. In addition, the question is at what cost these technologies are challenging existing or new transmission infrastructure with varying production and grid stress.
As shown in different jurisdictions that various providers used auctions for power supply, they were unable to satisfy and adequately value the supply of baseload capacity from sources like geothermal energy.
So it is certainly not strange to see geothermal not even mentioned in IRENA's report, as well as the extremely low prices for solar photovoltaics and onshore wind. Global average prices fell from around USD 241 to USD 66/MWh for solar PV(-73%) for the 2010-2017 timeframe, while onshore wind prices fell from about USD 79 to USD 46/MWh (-36%).
In Mexico, the government had recognized that the auction system effectively excluded geothermal because it would not be capable of competing on cost alone, and consideration was given to a baseload power incentive. Though, we don't understand where this is. In truth, to ensure minimum electricity prices, it is a country's energy legislation that decides energy security of supply weighted against the valid concern.In countries with high geothermal potential, such as Kenya, there was also a challenge.
Tags : International Renewable Energy Agency, Renewable Energy Auctions, renewable-based electricity, geothermal energy,