Dave Elliott: More and more national governments are transitioning from guaranteed price feed-in tariff models for supporting renewables to competitive tendering/contract auction schemes, justified in the belief that this will reduce costs. That’s the EU view, and tenders have also been backed by the International Renewable Energy Agency. However, the German Energy Watch Group say this is a mistake: FiTs have been very successful and widely adopted, whereas there are big disadvantages with tenders, their main effect being that less capacity is installed, with smaller projects being excluded and competition actually being reduced. The tendering/competitive auction approach also represents a ‘race to the bottom’, with a few low cost projects winning contracts, the rest being sidelined, and less capacity resulting overall. It is also not certain that the low bid price projects will actually all go ahead- they may have bid too low to be able to deliver in practice. That is what happened in some cases back in the 1980s, with the UK NFFO price/capacity auction system – a number of contracted projects were not able to deliver.
Environmental Research Web 14th April 2018 read more »