Impact of COVID-19 on Renewable Energy Auctions

Abstract

Auctions for renewable energy (RES) support are market-based, competitive bidding processes to identify the most appropriate RES projects to be constructed within a certain time frame and allocate support payments to these projects. Most EU Member States have introduced RES auctions that seem to have resulted in strong price decreases. The COVID-19 pandemic, its consequential lock-down of economic activity, the increased risks for investors and fears about an economic recession, have had profound immediate effects on the energy sector. Power demand has strongly decreased and there is high uncertainty for the mid-term. Industry associations worry that a reduced power demand and tighter budgets could reduce new auction volumes of RES projects.