REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the performance of support for electricity from renewable sources granted by means of tendering procedures in the Union
Date: 2022-11-15
Institutions: Directorate-General for Energy, European Commission
Subjects: EU energy policy, auction sale, electrical energy, energy production, environmental impact, renewable energy, security of supply, technological change, tendering

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 15.11.2022  COM(2022) 638 final  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the performance of support for electricity from renewable sources granted by means of tendering procedures in the Union  
 
 
1. Introduction 
The  transition  towards  a  climate-neutral  economy  will  require  accelerated  deployment  of 
renewable  power  generation  at  distributed  level  as  well  as  for  utility-scale  projects.  This 
should  be  increasingly  market-based  due  to  the  decreasing  trend  in  costs  of  renewable 
technologies, but so far the majority of projects1 have enjoyed some kind of public support. 
Support  schemes  can  take  various  forms,  structured  in  two  main  categories  –  investment 
support  (such  as  investment  grants,  discount  on  loans  or  rebates)  and  operational  support 
(such as certificate schemes, tariffs or premiums). Across the EU, operational support is more 
widely  applied,  allocated  in  the  case  of  utility-scale  projects  most  often  on  a  market  basis 
through competitive tendering procedures (referred to in this report as tenders or auctions).  

The role of the  tender-based  support schemes for renewable  energy  and  their principles are 
recognised  in  Article  4  of  Directive  (EU)  2018/2001  (‘Renewable  Energy  Directive’).  In 
addition, the State aid rules2 also prioritise competitive bidding processes such as tenders as 
the appropriate mechanism to allocate support to renewable energy producers. 

In order to understand the impact of tendering support schemes from a broader perspective, 
Article  4(8)  of  the  Renewable  Energy  Directive  mandates  the  Commission  to  report  to  the 
European  Parliament  and  to  the  Council  on  how  these  support  schemes  are  performing, 
measured  against  seven  performance  dimensions,  namely:  (i)  achieve  cost  reduction;  (ii) 
achieve  technological  improvement;  (iii)  achieve  high  realisation  rates;  (iv)  provide  non-
discriminatory  participation  of  small  actors,  where  applicable  local  authorities;  (v)  limit 
environmental impact; (vi) ensure local acceptability; (vii) ensure security of supply and grid 
integration. 

In this context, the report analyses how tendering procedures, as one of the forms of public 
support,  are  fostering  the  deployment  of  renewables  as  part  of  the  wider  transition  of  the 
energy system. Consequently, the focus of the report is the comparison between tenders and 
support  schemes  which  are  not  tender-based,  rather  than  a  comparison  between  different 
tender  design  options.  In  addition,  the  report  provides  insights  into  how  the  tendering 
procedures may evolve in the future to address the current energy policy context, the state of 
play of the energy markets and the latest challenges for the market integration of renewables. 

The  conclusions  of  the  report  should  be  seen  in  the  context  of  the  European  Green  Deal 
implementation  as  well  as  the  REPowerEU  plan,  which  rely  on  accelerated  large-scale 
deployment of renewable energy as a key driver for the decarbonisation of the economy and 
the electricity sector.  

2. Methodology 
The methodological basis for the report is structured around the seven elements referred to in 
Article 4(8) of the Renewable Energy Directive, against which the Commission shall measure 
the  performance  of  the  tendering  support  schemes.  These  seven  ‘performance  dimensions’ 

1  In  2018,  62%  of  the  renewable  electricity  produced  received  support,  according  to  CEER  Report  “Status 
Review of Renewable Support Schemes in Europe for 2018 and 2019”, 28 June 2021. 
2  Guidelines  on  State  aid  for  environmental  protection  and  energy  2014-2020  (2014/C  200/01)  and  the 
Guidelines on State aid for climate, environmental protection and energy 2022 (2022/C 80/01). 

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are  first  translated  into  specific  indicators  that  measure  the  concrete  effects  of  applying  the 
tendering procedure3.  

The next methodological step is to compare the performance of the tendering procedure with 
a counterfactual, in order to estimate the difference between scenarios with and without the 
tendering procedure in place. The report uses the following methods to estimate the effects: 

The first type of counterfactual –  ‘within country comparison’ – is used for those countries 
where  there  is  available  data  on  the  indicator  before  and  after  the  introduction  of  the 
tendering  procedure.  This  is  the  most  useful  method  to  identify  short-term  effects,  notably 
when comparing the period before the tendering scheme was introduced and the first period 
on  which  the  tendering  scheme  had  effect.  This  comparison  potentially  excludes  other 
external factors that might affect the analysed indicator.  

The second type of counterfactual – the cross-country comparison – compares the situation in 
a  country  with  a  benchmark  country  that  is  similar.  In  this  case,  the  before-and-after 
difference  of  the  analysed  country  is  compared  to  a  benchmark  performance  in  another 
country,  which  did  not  introduce  tendering  support  schemes  in  the  same  period,  and  the 
difference of the two performances will provide an estimation of the effect of the tendering 
schemes. 

The analysis in this report relies on four main information sources: (i) the AURES II auction 
database4 which includes information on auctions (dates, rounds, technology, rules, awarded 
capacities,  prices,  etc.);  (ii)  publicly  available  data  on  the  auctioneers’  websites  (mostly 
national  regulatory  agencies);  (iii)  publicly  available  reports  and  publications;  (iv)  data 
submission of the auctioneers which replied to data requests from the Commission. The data 
availability  is  the  reason  for  including  or  not  including  specific  Member  States  in  the 
comparisons and the calculations in the report. 

The  report  conducts  quantitative  analysis  to  measure  the  effect  on  performance  dimensions 
wherever  this  was  possible.  This  is  the  case  for  the  performance  dimensions  (i)  to  (iv).  A 
qualitative analysis using case studies was performed for dimensions (v) to (vii) to present the 
relevant  practices  in  the  Member  States  in  the  case  where  comparisons  cannot  be  designed 
(due to distortive factors or lack of data).  

The  Commission  organised  a  workshop  on  22  April  2022  where  stakeholders  had  the 
opportunity  to  comment  on  the  findings  of  a  draft  study  that  served  as  a  basis  for  the 
preparation  of  the  present  report5.  Representatives  of  auctioneers  and  regulators  from 
Member  States  and  independent  experts  in  the  field  of  renewable  electricity  and  auctions 
participated.  

3 When analysing the effects of the tenders under the specific indicator, special attention is paid to disqualify, as 
much as possible, external factors unrelated to the support scheme, which might directly or indirectly affect the 
indicator.  Examples  of  such  factors  are  sectoral  regulation,  technological  development  and  macro-economic 
trends. 
4 AURES database, available at: http://aures2project.eu/auction-database/.  
5 “Study on the performance of  support for electricity  from  renewable sources  granted by  means of tendering 
procedures in the Union” [DOI 10.2833/93256; ISBN 978-92-76-58625-8], prepared by MRC Consultants and 
Transaction  Advisers  and  REKK  Energiapiaci  Tanacsado  Kft.  The  study  is  contracted  by  the  European 
Commission 

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3. Assessment of the dimensions 
3.1. Cost reduction 
The  performance  dimension  “achieve  cost  reduction”  pursuant  to  Article  4(8)(a)  of  the 
Renewable  Energy  Directive  is  interpreted  in  this  report  as  the  reduction  of  the  amount  of 
support  cost  to  renewable  energy  installations  from  a  public  budget  point  of  view,  thus 
reducing the burden on consumers and taxpayers. The indicator to measure the support cost 
reduction is the unit electricity price paid to renewables producers for a MWh, defined as the 
price paid from the tender budget to the producer for every unit of electricity.  

Before  tenders  were  widely  introduced,  the  most  common  support  scheme  was  the  feed-in 
tariff,  which  offered  guaranteed  prices  for  renewable  energy  producers,  usually  set  by  the 
government  or  the  regulator.  They  were  effective  as  a  tool  to  increase  the  deployment  of 
renewables, but not necessarily efficient from a budgetary point of view. Subsidy rates were 
based on cost estimates and the information asymmetry between project developers and those 
responsible  for  determining  prices  and  quantities  was  in  some  cases  significant.  The 
financing  of  the  feed-in  tariffs  through  levies  on  all  (or  a  specific  subsection)  of  electricity 
demand led to a financial burden for many electricity consumers. As a result, the approach of 
feed-in tariffs for large-scale projects was discussed and challenged.  

Governments switched to competitive bidding procedures to determine the necessary level of 
support, to reveal the real cost of projects, and thus to allocate the lowest possible subsidy for 
an energy unit. With this approach, multiple sellers are able to offer bids in the tender, as long 
as  they  meet  all  of  the  tender  specifications.  The  level  of  competition  is  crucial  when 
assessing  the  impact  on  cost  reduction.  When  the  number  of  participants  is  low,  the 
competitive pressure  is  too weak to  induce bidders to  optimise each segment of the  project 
development value chain and the resulting bid prices do not reveal the real cost of projects. 

Solar PV 

The  following  figure  shows  the  percentage  change  in  prices  achieved  as  a  result  of 
introducing auctions. For the countries marked in blue, the change in price is calculated as the 
difference  between  the  support  price  paid  from  the  budget  to  producers  (as  €/MWh)  in  the 
last  year  of  the  administratively  set  tariff  and  the  support  price  paid  in  the  first  year  of 
implementation of tenders. For the countries in  green6, a cross-country comparison is made 
between  the  relative  price  decrease  of  the  same  period  compared  to  a  benchmark  –  the 
administratively  set  tariff  in  Austria  for  the  period  of  2012-2019.  Austria  is  used  as  a 
benchmark because it is the only EU country that implemented administratively set tariff for 
a  sufficiently  long  period,  making  the  set  of  values  of  the  tariff  reliable  for  a  robust 
comparison to take place.  

6 For Hungary and Italy, the table includes auctions which targeted different size of solar PV projects. 

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Figure 1: Cross-EU comparison of change of support costs for solar PV.  

Source of data: Aures II auction database 

The average change in price, i.e. the change in total support costs is calculated at – 4.73%. As 
a  general  conclusion,  in  most  countries  the  introduction  of  tenders  resulted  in  lower  unit 
electricity prices, thus lower support costs and less burden on consumers or State budget for 
PV technology. The exceptions are Italy (small-scale PV auction), Greece, Malta, Poland and 
Slovenia. For these countries, the increase in prices can be explained by external factors. In 
Slovenia,  under  the  feed-in  tariff system prior to the tender, the prices that  were set  by the 
administration were reduced at a very fast pace, reaching a level too low for the producers. In 
Poland,  a  green  certificate  system  was  in  place,  where  a  significant  oversupply  occurred  in 
2015  (just  before  the  introduction  of  auctions)  drastically  lowering  prices  that  year.  The 
increase  of  support  costs  for  small  PV  technology  in  Italy  is  explained  by  the  fact  that 
historically this technology is better promoted through administrative support schemes due to 
the  less  informed  project  developers,  in  particular  before  2019.  In  Greece,  the  level  of 
competition  was not  very  high  (only  slight  oversubscription) in  the first tender,  which may 
have  resulted  in  similar  outcomes  to  feed-in  tariff  prices.  Similar  external  factors  were  not 
identified for the main group of countries where a decrease of the prices is observed. 

Onshore wind 

An identical analysis is performed also for onshore wind tender. The results show that in the 
case of all the countries considered in the analysis, except for Ireland, the introduction of the 
tender scheme led to a decrease in the support prices paid for this technology, leading to an 
average  reduction  of  the  support  costs  at  –  14.02%.  In  Ireland  the  first  auction  round  was 
undersubscribed which may be the main reason behind the increase in prices. 

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Figure 2: Cross-EU comparison of change of support costs for onshore wind in the period 2010 – 2020. 

Source of data: Aures II auction database 

Offshore wind 

With the exception of Denmark and the Netherlands, tenders for the support of offshore wind 
installations  are  more  recent  and  have  only  been  implemented  in  a  limited  number  of 
countries.  In  some  of  them  the  timespan  between  the  tender  and  the  old  support  scheme  is 
significant  (9  years  in  France  and  5  years  in  Germany),  which  does  not  allow  for  robust 
comparison.  Nevertheless,  the  shift  in  support  costs  in  France  and  Germany  is  noticeable, 
with  a  reduction  from  115,5  €/MWh  and  140,3  €/MWh  paid  through  administrative 
determined support level to 60 €/MWh and 46,6 €/MWh in the first  tender, respectively. In 
other countries there are examples of extreme reduction of the support costs through zero or 
negative bids. Lithuania’s new offshore wind tender model, as well as the last Dutch tender 
for two sites at Hollandse Kust West allow for negative bidding. The winner of Denmark’s 
last  offshore  wind  tender  is  paying  the  government  €375  million  to  develop  a  1  GW  wind 
farm.  In  all  these  cases  however  there  was  a  scarcity  in  terms  of  limited  geographical 
locations or grid connection, as well as public support for connection and infrastructure costs 
in some cases, which incentivised the project developers to lower their bid.  

Impact of the tender design on cost reduction 

Even  though  the  objective  of  the  report  is  not  to  analyse  the  different  design  options  of 
tenders,  but  rather  to  look  at  tender-based  support  for  renewables  in  general,  it  is  worth 
mentioning the effect of the choice of a tender type on the indicator of cost reduction in case 
of high volatility of market prices. 

In the EU, three main types of tendering support schemes are implemented: one-sided sliding 
premium,  two-sided  sliding  premium  (referred  to  as  ‘contract  for  difference’)  and  fixed 
premium7. 

7 In the one-sided premium system, if market price is below auction strike price, producers receive support that 
covers the gap, and if market price is higher, they can keep the excess revenue. The two-sided premium operates 
in a similar fashion, however excess revenue must be paid back by the producer. In the fixed premium scheme, 
producers receive a fixed amount of excess revenue on top of the market price. 

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In  case  of  unexpected  drop  in  the  electricity  market  price,  from  the  point  of  view  of  cost 
reduction,  the  fixed  premium  scheme  performs  the  best.  Under  such  scheme,  all  the  risk 
associated with low prices is borne by producers, thus it does not generate excess burden on 
consumers or on the budget.  In sliding premium schemes, support costs may rise drastically 
as  the  drop  in  price  needs  to  be  covered.  This  risk  however  can  be  mitigated  if  the  total 
amount of paid support is capped by the auctioneer.  

If  prices  become  unexpectedly  high,  contract  for  difference  performs  the  best,  because  its 
pay-back obligation avoids excess revenues for a project that has received public support. It 
also generates revenue for the state. The role of contracts for difference as an instrument to 
capture  the  infra-marginal  rents  in  periods  of  high  prices  is  already  reflected  in  the 
REPowerEU Communication.8 In the one-sided scheme, there is no excess support burden for 
the  budget,  but  excess  revenue  for  the  project  is  generated.  For  the  fixed  premium,  no 
additional support costs occur, though over-subsidisation can occur, which is not an optimal 
allocation of resources. This effect can be mitigated, however, by introducing a price cap in a 
fixed premium scheme, above which there are no supports paid. 

Conclusions for Dimension 1: Cost reduction 

  Tendering  procedures  provide  the  necessary  framework  to  deploy  electricity  from 
renewable  sources  at  the  lowest  possible  cost,  as  data  indicates  that  in  most  of  the 
cases  the  cost-reduction  has  been  a  result  of  the  implementation  of  a  tender-based 
scheme for all investigated technologies.  

  For  both  solar  PV  and  onshore  wind,  evidence  shows  that  if  competition  in  the 
auction  is  high  (i.e.  reaching  an  oversubscription  level  of  more  than  1.5),  then 
reduction  of  support  costs  tends  to  be  higher  than  for  those  auctions  where 
competition  is  less  intense.  In  other  words,  tendering  procedures  achieve  cost 
reductions if they generate a sufficient level of competition. 

3.2. Technological improvement 
The performance dimension “achieve technological improvement” pursuant to Article 4(8)(b) 
of the Renewable Energy Directive is interpreted in this report as the reduction of the cost for 
the  development  of  renewable  energy 
production  of  renewable  energy,  following 
technologies.  

The  indicator  to  measure  the  achieved  technological  improvement  is  the  levelised  cost  of 
electricity.9  This  indicator  is  suitable  as  it  incorporates  the  direct  cost  reduction  through 
capital  expenditure  (CAPEX)  and  the  operational  expenditure  (OPEX),  which  results  from 
the  improvement  of  the  renewable  energy  technologies.  Nevertheless,  LCOE  decreased 
significantly between 2010 and 2020, especially in the case of PV technology, as a result of 
the global technology development, not necessarily linked to the introduction of tenders, but 
rather  due  to  other  factors  such  as  spill-over  effects,  innovation,  increased  demand  for 

8  REPowerEU:  Joint  European  Action  for  more  affordable,  secure  and  sustainable  energy,  COM(2022)  108 
final, 8.3.2022. 
9  The  LCOE  is  the  average  net  present  cost  of  electricity  generation  for  a  generating  plant  over  its  lifetime, 
incorporating the sum of all investment, operational and maintenance cost over its lifetime divided by the total 
electrical  energy  produced  over  the  lifetime.  The  value  is  discounted  with  WACC  (weighted  average  cost  of 
capital) in order to receive the present value. 

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renewable energy as part of public support measures, improved financing conditions such as 
the weighted average cost of capital etc.10 In order to account for these external factors, the 
LCOE evolution in the analysed countries is compared with the performance in a benchmark 
country  without  tender-based  support  scheme,  as  well  as  to  the  global  performance  for  the 
technology.  

Onshore wind 

The following table summarizes the average yearly change of LCOE. In the column ‘In the 
country’, the value shows the comparison between the LCOE value before and after the first 
tender has been organized, where 3–5-year long periods are considered.  

In addition to the difference of the LCOE within the countries, and in order to consider other 
cost-determining factors that are independent from the applied support scheme, comparisons 
are presented with  two benchmarks:  Sweden  and the global average. Sweden did  not  apply 
tendering schemes, yet managed to reach large capacity additions for onshore wind through a 
competitive  green  certificate  scheme.  The  global  average  values  cover  all  installations 
regardless  of  the  regulatory  environment,  location,  or  investors’  experience,  including  the 
analysed countries. Although global average is clearly not a counterfactual as it contains both 
auctioneer  and  non-auctioneer  countries,  it  can  serve  as  a  suitable  benchmark  because  if 
tenders fostered technological development, the auctioneer countries’ performance would be 
better than the average performance.  

Difference in average change rate of LCOE  
(before and during auctions) 

Comparison  

Countries 

Year of first 
auction 

In the country 

In Sweden 

Globally 

To Sweden 

 Italy  

 Spain  

2012 

2016 

 Germany  

2017 

 Denmark  

2018 

 France  

2018 

Average 

- 

-5.5% 

-2.7% 

-7.4% 

3.9% 

-12.1% 

-4.8% 

-3.7% 

-5.7% 

-7.0% 

0.0% 

0.0% 

-3.3% 

2.0% 

-5.5% 

-7.5% 

-5.6% 

-5.6% 

-4.4% 

-1.8% 

2.9% 

-0.5% 

3.9% 

-12.1% 

-1.5% 

To global 
average 

-7.5% 

2.7% 

0.1% 

9.5% 

-6.5% 

-0.4% 

Figure 3: Comparisons of average change of LCOE for onshore wind 

The data shows that the average LCOE decrease in the analysed auctioneer countries (-4.8%) 
is higher than the benchmarks of Sweden and globally (-3.3%, -4.4%), therefore the tendering 
schemes  slightly  outperformed  the  benchmarks  (in  average).  Nevertheless,  LCOE  values  in 

Source of data: IRENA (2021) 

10  According  to  IRENA  (IRENA,  Renewable  Power  Generation  Costs  for  2020,  IRENA,  Abu  Dhabi,  2021, 
https://www.irena.org/publications/2021/Jun/Renewable-Power-Costs-in-2020),  the  cost  of  PV  diminished  by 
83% over this period globally (yearly average 16% reduction), while the cost of onshore wind dropped by 47% 
(6% average annual reduction). 

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Sweden and also globally decrease at similarly fast pace, which means that the technological 
development is improved also independently from a tender-based support scheme.  

In addition, the country-level effects are diverse. The auction schemes outperformed both the 
Swedish green certificate system and the global average in Italy and France, underperformed  
in  Spain  and  Denmark,  while  the  German  system  reached  similar  achievements  as  the 
benchmarks. Without prejudice to other factors, the most plausible explanation is that auction 
schemes  can  contribute  to  significant  cost  reductions  if  costs  are  at  a  higher  level  at  the 
moment  of  the  introduction  of  the  tender,  while  they  are  less  effective  in  the  case  of  more 
mature and efficient technologies.  

Solar PV 

The following table, in the column ‘In the country’, summarizes the average change rate of 
LCOE for solar PV before and after the auctions were introduced for few countries, however 
the analysis is less robust than for onshore wind because of lack of data for specific years.11 

The country-level results are highly diverse for the three countries, culminating in a close-to-
zero  average  difference.  The  table  suggests  that  the  difference  between  the  observed  cost 
reductions  before  and  during  the  auction  schemes  is  largely  a  function  of  the  time  of  the 
introduction: the earlier the introduction of auctions took place, the higher the potential of the 
tender is to contribute to LCOE reduction. However, this may be associated with general cost 
development  patterns,  namely  the  cost  of  the  technology  decreased  faster  in  the  period 
between 2012 and 2015 than before or after in all four countries. 

The cost development pattern of the analysed countries is compared to two benchmarks – to 
the global average and to a country-level example where LCOE values are available and no 
solar PV tender was held. Such a country-level example does not exist in the EU, therefore a 
third country with comparable technological progress in renewables was selected. For reasons 
of data availability, the most relevant example as a benchmark is the Republic of Korea. 

Countries 

Year of first 
auction 

Difference in average change rate of LCOE  
(before and during auctions) 

Comparison  
(difference-in-differences) 

In the country 

In Korea 

Globally 

To Korea 

To global 
average 

 France  

2012 

-16.8% 

 Germany  

2015 

 Italy  

2019 

Average 

- 

5.1% 

8.5% 

-1.1% 

8.1% 

5.8% 

1.9% 

5.3% 

-3.8% 

-24.9% 

-13.0% 

2.8% 

4.9% 

1.3% 

-0.7% 

6.7% 

-6.3% 

2.2% 

3.6% 

-2.4% 

 Source of data: IRENA (2021) 

Figure 4: Comparisons of average change of LCOE for PV 

11 IRENA (2021) database starts at 2010 for PV and does not contain data for 2012 for France, when the first 
auction  was  held  in  the  country.  For  Spain,  LCOE  data  is  not  available  for  2016,  2017  and  2018,  while  the 
auctions  stated  in  2017,  therefore  only  the  pre-  and  post-auction  price  levels  can  be  compared,  but  not  the 
decreasing rates. 

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The  analysis  shows  that  the  direction  of  the  effects  does  not  change,  only  their  magnitude. 
The  cost  development  in  Korea  was  highly  different  compared  to  Italy  and  France  (and 
similar to Germany), making the country-level results even more diverse. The average value 
suggests that the  tender-based  scheme outperformed the Korean benchmark (6%  faster  cost 
reduction).  In  contrast,  the  global  cost  development  was  similar  to  the  European  result  but 
shows  smaller  (closer  to  zero)  differences  between  the  periods  before  and  during  auction. 
This  leads  to  the  conclusion  that  global  cost  trends  can  partially  explain  the  observed 
differences, but not entirely. On average, the tendering procedures’ performance was slightly 
better  (faster  cost  reduction)  than  the  global  average,  but  this  conclusion  comes  from  the 
strong cost reduction in France. It is noteworthy that the global average development contains 
(i) also the analysed countries, and (ii) many other countries, where PV development started 
later, therefore higher cost reductions can be achieved. Moreover, due to the spill-over effect 
and other external factors, cost reductions achieved in auctioneer countries can lower costs in 
non-auctioneer countries as well.  

Conclusions for Dimension 2: Technological improvement 

  The  LCOE  development  as  a  benchmark  for  technological  improvement  shows  that 
tender-based support schemes may have an effect on the cost development, but other 
general and country-specific factors may have stronger influence. The maturity of the 
technology, the financing conditions, the overall global capacity deployment (and the 
associated  learning  and  impacts  on  LCOE),  as  well  as  the  country’s  position  on  the 
learning  curve  (capacity  additions,  investors’  experience)  play  a  crucial  role  in  this 
regard and can be considered as stronger drivers for technological improvement.  
  The LCOE of onshore wind technology decreased faster (on average) after the tenders 
were introduced. However, this conclusion is valid mainly for those countries where 
costs  were  high  and  stagnating  before  the  introduction  of  tenders.  Other  types  of 
market-based  schemes  can  also  effectively  drive  the  cost  down  (e.g.  the  Swedish 
green certificate system). 

  Currently, tenders in the EU are mostly centred around three technologies, solar PV, 
onshore  wind,  and  offshore  wind.  For  other  technologies  tenders  are  relatively  rare, 
and  only  contribute  to  a  limited  extent  toward  technological  improvement  for  these 
technologies. 

3.3. High realisation rates 
The performance dimension “achieve high realisation rates” pursuant to Article 4(8)(c) of the 
Renewable  Energy  Directive  is  interpreted  in  this  report  as  the  total  volume  of  renewable 
energy capacity added after the introduction of tenders, compared to capacity volumes added 
before12.  

It  is  important  to  highlight  that  European  countries  operate  many  other  types  of  supports 
schemes,  such  as  investment  grants,  or  net  metering  for  household  projects,  meaning  that 
capacity deployment is also possible even in the absence of operational support. In addition, 
there might be external factors that impact the pace of deployment, such as shift in the policy 

12 An interpretation of high realisation rates as a share of projects in a tender that are realized fully and on time 
would go beyond the scope of the report, because it depends on the features of the tender design (e.g. the penalty 
system,  prequalification  requirements  etc.)  and  thus  on  the  choice  of  tendering  option  that  would  require  a 
comparison between them. 

9 

 
 
 
                                                           
The following table compares the yearly average volume of new renewable capacity which is 
added  in  the  selected  countries  in  the  periods  before  and  after  the  tender.  The  first  year 
corresponds to the date when projects awarded in the tender are expected to start operation. 
This  is  the  realisation  deadline  of  the  first  tender  round,  which  divides  the  dataset  into  the 
pre-tender and post-tender periods. The table includes only support schemes associated with 
operational support of non-household size projects.  

Country and technology 

Denmark PV 

Denmark Onshore Wind 

Finland Onshore Wind 

France PV 

Germany PV 

Germany Onshore Wind 

Greece PV 

Greece Onshore Wind 

Italy Onshore Wind 

Lithuania Onshore Wind 

Luxemburg PV 

Netherlands PV 

Netherlands Onshore Wind 

Poland PV 

Slovenia PV 

Spain PV 

Spain Onshore Wind 

First year of 
completion of 
the tendered 
capacity  

Average yearly 
capacity 
addition pre-
tender period 
(MW)  

Average yearly 
capacity 
addition post-
tender period 
(MW) 

Previous non-tender 
based operational 
support scheme 

Change % 
(compared to 
last 3 non-
tender years) 

2018 

2020 

2020 

2014 

2017 

2018 

2017 

2019 

2015 

2015 

2020 

2015 

2016 

2019 

2018 

2020 

2019 

99.7 

196.7 

239.3 

1411.0 

1323.0 

4549.0 

8.3 

242.7 

594.7 

25.6 

12.7 

286.0 

320.7 

151.3 

9.7 

1420.0 

179.0 

131.3 

136.0 

302.0 

921.0 

3276.0 

1517.0 

160.8 

622.0 

105.2 

37.2 

35.0 

1534.3 

223.4 

1687.0 

6.7 

2812.0 

1859.5 

Feed-in premium 

Feed-in premium 

Feed-in tariff 

Feed-in tariff 

Feed-in tariff 

Feed-in tariff 

32% 

-31% 

26% 

-35% 

148% 

-67% 

Feed-in tariff 

1829% 

Feed-in tariff 

Green certificate 

Feed-in tariff 

Feed-in tariff 

Feed-in tariff 

Feed-in tariff 

156% 

-82% 

45% 

176% 

436% 

-30% 

Green certificate 

1015% 

Feed-in tariff 

None13 

None 

-31% 

98% 

939% 

Source: own calculation based on IRENA (2021) 

Figure 5: Comparison of yearly average new capacities in the pre- and post-tender period 

In  the  table,  17  cases  are  presented  of  which  11  show  positive  change  in  the  yearly  new 
capacities. In many cases the magnitude of this growth is very large, which can be the result 
of two situations.  

Firstly,  there  are  countries  in  which  the  relevant  technology  was  not  present  or  not  well 
established  before  the  tendering  period.  In  these  cases,  it  can  be  argued  that  tender-based 
support scheme was the first real opportunity for producers to receive support and to start the 
wide  scale  deployment.  This  explanation  mainly  applies  for  PV,  as  the  technology  became 
mature  later  in  Europe,  thus  implementation  of  tender  design  coincided  with  technological 
maturity. Two very  good examples are Netherlands and Poland, both  for PV, where  before 

13 In Spain a feed-in tariff was in place, but it was suspended so no new projects were allowed to be constructed 
within the scheme. 

10 

 
 
                                                           
the  tender  scheme  new  capacity  additions  were  low,  and  the  tendering  scheme  accelerated 
technology  development.  In  Germany  and  Luxembourg  a  similarly  high  increase  in  PV 
capacity can be observed, even with a higher pre-tender baseline value. 

Secondly, there are some countries where capacity additions were very low in the years just 
before  the  introduction  of  tendering  due  to  the  country’s  regulation.  In  these  countries  it  is 
clear that as long as support is provided, large capacity expansions are observable.  

For the cases where the new capacities are reduced compared to the pre-tender period, there 
are several explanations. Firstly, if a technology can be considered mature in a country with 
already high operating capacities, natural reduction in the new added capacities is expected. 
In  such  cases  grid  availability  issues  may  also  incentivise  auctioneers  to  reduce  volumes 
offered  to  the  auctions.  Also,  mainly  for  onshore  wind  technology,  with  a  lot  of  capacities 
already  installed  in  the  country,  deployment  issues  may  occur  with  a  lack  of  suitable 
important 
locations,  which  can  significantly 
consideration is  that  where  feed-in  tariffs provided very  generous support  for new projects, 
the  deployment  in  the  pre-tender  scheme  was  faster.  In  these  instances,  lower  tender-based 
remuneration may have provided less incentive for producers to build new renewable energy 
capacities.  

limit  capacity  expansions.  Lastly,  an 

In  2021,  a  drastic  expansion  of  new  renewable  capacities  based  on  power-purchase 
agreements  (PPAs)  is  observed.14  This  is  partly  due  to  the  increasing  maturity  of  the  PPA 
market  as  well  as  the  increasing  electricity  market  prices,  creating  increased  demand  for 
PPAs from corporate offtakers. Furthermore, there is an interplay between the availability of 
public  support  schemes  and  the  market  for  PPAs.  For  example,  the  cancellation  of  multi-
technology tenders in  Lithuania in  2020  and  Denmark in  2021  due to  low participation has 
resulted  in  the  emergence  of  a  number  of  PPA  projects  for  deploying  additional  renewable 
capacity,  suggesting  that  PPAs  can  be  a  more  attractive  and  market-based  alternative  to 
public support schemes. The concrete impacts of the cancellation of support schemes on an 
increased  PPA  market  cannot  be  confirmed  by  quantitative  analysis  as  PPAs  only  start  to 
develop in a small number of EU countries in the last couple of years, and very limited data is 
available on them.   

Conclusions for Dimension 3: High realization rates 

  Tenders contribute significantly to the capacity expansion of wind and solar projects, 
without prejudice to other external factors. Post auction period capacity expansion is 
larger than before tenders were introduced in many of the European schemes. 

  Slower deployment mostly occurred in countries where at the time of the introduction 
of  tenders,  the  relevant  technology  was  already  widely  applied,  but  the  rate  of 
reduction is relatively small even in these cases. 
In  some  European  countries  such  as  Poland  or  the  Netherlands,  the  introduction  of 
auction  directly  resulted  in  the  starting  of  large-scale  deployment  of  a  given 
renewable technology (in this case – solar PV). 

 

  PPA  contracted  capacities  experience  a  significant  increase  –  this  very  positive 
development constitutes an alternative or complementary avenue to tenders, and may 
result in undersubscribed auctions. 

14 In 2021 the total PPA contracted capacities in Europe stood at 6.7 GW, of which the market leaders are Spain, 
Sweden and Germany.  

11 

 
 
                                                           
3.4.  Non-discriminatory  participation  of  small  actors  and,  where  applicable,  local 
authorities 
The  performance  dimension  “provide  non-discriminatory  participation  of  small  actors  and, 
where  applicable,  local  authorities”  pursuant  to  Article  4(8)(d)  of  the  Renewable  Energy 
Directive  is  interpreted  in  this  report  as  the  capability  of  small  actors  to  participate  with 
small-size projects on equal footing and be awarded in tenders. The indicator to measure this 
dimension is the average size of new projects awarded through tenders, showing how tender 
design was able to provide such incentives that the initial barriers affecting small actors (e.g. 
lack  of  economies  of  scale,  worse  loan  conditions,  higher  project  costs  per  energy  output, 
lower  level  of  specialization)  were  tackled.  As  there  are  no  available  examples  of  local 
authorities  that  participate  in  the  tender  as  bidders,  tendering  aspects  related  to  the 
involvement of local stakeholders in a broader sense are covered in Section 3.6. 

The  level  of  participation  of  small  actors  and  projects  is  determined  by  the  restrictions  on 
project size, incorporated in the design of the tender. In order to have an overview, 4 types of 
tender design in respect to the project size restrictions can be distinguished: 

  small: this includes the tenders targeting small scale projects with capacity of up to 1 

MW for solar PV and 3 MW for onshore wind; 

  balanced:  this  includes  the  tenders  allowing  participation  of  small-scale  projects,  at 
least to some extent (less than 1 MW for solar PV and 3 MW for onshore wind), and 
medium-size  projects  (up  to  50  MW)  on  equal  footing,  i.e.  allowing  competition 
between  them,  but  excluding  very  large  projects  to  avoid  price  advantages  resulting 
from economies of scale. 

  size category: this includes parallel tenders organized within one year, where at least 
one  tender  targets  small-scale,  and  at  least  one  tender  targets  large-scale  projects, 
whereby the two projects types are not in competition with each other.  
large: this includes tenders where small–scale projects were excluded, or there was no 
maximum capacity limit of the tenders 

 

Solar PV 

The results of the analysis for the period 2010 - 2020 shows that Croatia, Estonia, France and 
Poland  are  the  countries  in  which  tender  design  in  some  years  directly  targeted  small-scale 
projects only. In Croatia there was one, while in Estonia two pilot tenders were organised for 
small  projects  only,  however  both  countries  are  planning  the  introduction  of  large-scale 
tenders soon. In Poland, the tendering procedure started with small-scale tenders in 2016 and 
2017,  but  in  later  years,  large  tenders  were  organised  in  parallel  as  well.  Early  tenders  in 
France targeted small-scale projects too: in the years 2014 and 2016 only such auctions were 
organised.  The  average  size  of  the  projects  in  these  tenders  is  very  low,  ranging  from  0.24 
MW to 0.65 MW. 

A special treatment  for small-scale projects  under the ‘size category’  option was  applied in 
many  countries  –  Denmark,  France,  Greece,  Hungary,  Italy,  Luxembourg,  and  Poland.  In 
addition,  the  Netherlands  used  a  dynamic,  ascending  clock  type  of  auction,  with  different 
ceiling  prices  for  different  solar  PV  project  sizes.  Thus,  for  solar  PV,  this  solution  where 
parallel tenders are organised within one year, one of which targets small-scale project, can 

12 

 
 
 
be  considered  as  common  but  not  universal  in  Europe.  Size  categorisation  tends  to  keep 
average  project  size  closer  to  small-scale,  as  average  sizes  range  between  0.38  MW  (Italy) 
and 5.45 MW (Denmark). 

Onshore wind 

The option of tenders that favour small-scale projects is less common for onshore wind than 
for solar PV – only Estonia in 2020 and Poland until 2018 organised them. The average size 
in both countries is less than 1 MW in these associated time periods. 

With respect to the other three design types, the results are very heterogeneous across Europe, 
leading to very different average awarded sizes. The smallest project sizes were identified in 
Estonia, with  less than 0.5 MW, but  also  in  the relevant  period low values  were  associated 
with  Italy,  Slovenia,  and  the  Netherlands.  These  results  indicate  that  small-scale  onshore 
wind applications are a viable solution for the European energy mix.  

The EU-wide results for the average size of the awarded projects under the four approaches 
to  tender  design  are  presented  in  the  table  below  and  allow  for  the  following  conclusions, 
taking into account the very different composition of the tender design options between solar 
PV and onshore wind. Firstly, there are existing tenders aimed at the preferential treatment of 
small-scale  wind.  Secondly,  the  ‘size  category’  solution  on  average  leads  to  lower  average 
project size compared to the ‘balanced’ solution. Thirdly, if maximum capacity limit does not 
exist,  and  no  size  categories  are  applied,  then  very  large  projects  tend  to  dominate  the 
auctions results. 

SMALL 
BALANCED 
SIZE CATEGORY 
LARGE 

Average size (MW) 
Solar PV 
0.47 
2.61 
1.88 
40.85 

Average size (MW) 
Onshore wind 
0.59 
12.78 
10.55 
43.83 

Source: Own calculation based on IRENA (2021) 

Figure 7. Average size of awarded projects in EU under the four design options for solar PV and onshore wind 

It  is  important  to  note  however,  that  the  size  limitation  in  tenders  comes  with  a  significant 
drop  in  price  efficiency,  which  is  also  due  to  economies  of  scale,  access  to  better  location, 
financing and other factors. The support cost in the small category tends to be higher than in 
the large category, as shown in the following table: 

Year of 
investigated 
auction 

Average winning 
price in the small 
category 
(EUR_2019/MWh) 
62.0 

Average winning 
price in the large 
category 
(EUR_2019/MWh) 
52.4 

7.6 

Price difference of 
the two categories 

Country and Technology 

France PV 

Greece PV 

Hungary PV 

Italy PV 

Poland PV 

2020 

2018 

2020 

2020 

2020 

64.6 

48.4 

68.2 

49.9 

14.8 

14.4 

23.7 

7.4 

79.4 

62.8 

91.9 

57.3 

13 

 
 
 
Italy Onshore wind 

2020 

Lithuania Onshore wind  2013 

Poland Onshore wind 

2018 

134.8 

111.0 

83.7 

68.3 

76.4 

46.6 

66.5 

34.6 

37.1 

Source: AURES II auction database 

Figure 8: Comparison of small- and large-scale auctions results in terms of awarded average prices 

The results show that separate small-scale tenders have a significant price premium, in most 
of the cases larger than 10 EUR/MWh, except for PV in Poland and France. This price bonus 
is  significantly larger  for onshore wind  (30  – 40  EUR/MWh) than for solar PV (around 11 
EUR/MWh on average). Therefore, introducing tender specifications that favour small-scale 
projects is associated with additional financial burden in terms of cost of support, paid to the 
awarded projects. 

Conclusions for Dimension 4: Non-discriminatory participation of small actors 

  More than half of the European countries organise(d) tenders for small-scale solar PV 
projects,  whereby  the  introduction  of  size  categories  for  solar  PV  projects  can  be 
considered a widely (but not universally) applied solution. 

  For  those  tenders  where  neither  a  maximum  capacity  limit  is  set  nor  separation  of 
different baskets based on size occur, the general tendency is that large-scale projects 
dominate the tenders, giving smaller projects less chance of winning, mainly because 
of economies of scale.  

  Compared  to  maximum  size  limit  set,  size  categories  seem  a  more  efficient  way  to 

enhance participation of small projects and hence – small actors.   

  When size category solution is applied, price efficiency drops considerably. Also, as 
participating projects are divided based on size, the intensity of competition may also 
be reduced. 

3.5. Environmental impact 
The performance dimension “limit environmental impact” pursuant to Article 4(8)(e) of the 
Renewable Energy Directive is challenging insofar as the theoretical connection between the 
implementation of auction-based support allocation and limiting environmental impact is not 
self-evident.  The  main  determinant  of  environmental  impact  is  not  whether  the  support 
allocation is based on administrative, market or tender-based process, but what is the impact 
of the  renewable energy capacities,  e.g. by substituting conventional power plants and thus 
reducing greenhouse gas (‘GHG’) emissions, which depends on many other factors, such as 
specific  environmental  regulation  and  the  location  of  the  installation.  Renewable  energy 
projects  may  also  have  a  range  of  impacts  on  other  environmental  objectives,  such  as  soil, 
water, air and noise pollution, or habitats. Therefore, this dimension is analysed through case 
studies that show some specific design elements which are related to the wider environmental 
impact of the awarded renewable energy projects. Such design elements that are not related to 
‘the main objectives’ of a support measure can form up to 30 % of the weighting of all the 
selection  criteria  in  a  tender,  according  to  the  state  aid  rules15,  thus  forming  an  important 
potential lever to contribute to specific policy objectives (e.g. circular economy with criteria 

15 Commission’s Guidelines on State aid for climate, environmental protection and energy 2022, (2022/C 80/01) 
p. 50. 

14 

 
 
 
                                                           
on recyclability, or other sustainability criteria). However, these criteria need to be carefully 
designed in order to not result in protectionist effects which are not in line with EU policies 
or WTO rules. 

Case study - Italy 

Italy implemented a tender scheme between 2019 – 2021 with seven separate auction rounds. 
Different baskets  were created based on the size of planned projects (threshold 1 MW) and 
technologies. 

For  small  hydroelectric  power  plants  (less  than  1  MW),  the  tender  criteria  allowed  a 
hydroelectric  power  plant  that  complies  with  a  list  of  environmental  conditions  on  water 
management  to  be  ranked  high  in  the  tender  independent  of  the  offered  price.  In  all  tender 
rounds (except the last one) an oversubscription occurred in the auctions, thus one aim of the 
tender was achieved, as projects better for water quality won. On the other hand, the tender 
design  created  a  negative  incentive  in  terms  of  non-competitive  bidding,  as  those  projects 
which fulfilled the required conditions were certainly winning, thus almost all such projects 
bid the ceiling price of the auction. 

For  solar  PV  plants  (less  than  1  MW),  the  tender  included  a  separate  category  of  projects 
where rooftop solar panels are installed as replacement of asbestos or slate. In addition, these 
projects  received  a  10  EUR/MWh  premium  in  comparison  to  other  types  of  small  PV 
projects.  The  results  of  the  awarded  capacities  in  the  tender  rounds  show  a  constantly 
increasing interest in the small-scale solar PV projects (8 MW in the first round, increased to 
110 MW in the seventh round). However, in this special PV category, offered volumes by the 
government  in  the  tender  round  were  very  high  which  resulted  in  the  fact  that  all  auction 
rounds  were  undersubscribed,  leading  to  offered  prices  very  close  to  the  ceiling  price. 
Furthermore,  an  adaptive  behaviour  of  the  bidders  is  identifiable,  where  in  the  first  round 
bidders  offered  0.4%  lower  price  compared  to  the  ceiling,  and  in  the  fifth  round  this 
decreased to 0.01%, making the tender sub-optimal in terms of cost-efficiency.  

Thus, in this case tenders targeting projects with specific non-GHG reduction environmental 
impact achieved their objectives but did not promote competition and price discovery. 

Case study – Netherlands 

The  Netherlands  have  applied  tenders  based  only  on  price,  however  included  pre-
qualification  requirements,  including  a  complete  environmental  impact  assessment  for 
tenders  which  are  site-specific.  This  ensures  that  the  environmental  implications  of  the 
project are taken into account before the decision about the awarded bidder is made, and that 
ex-ante public participation in decision-making takes place.  

The  evidence  does  not  indicate  a  risk  that  an  environmental  criterion,  applied  prior  to  the 
tender, has an impact  on the price.  In the case of  the Netherlands  where the environmental 
impact  assessment  is  mandatory  ex-ante,  the  awarded  price  is  lower  than  in  other 
(comparable) countries where it is not. This confirms that an appreciable reduction in costs 
can  still  be  achieved,  even  in  case  of  tenders  that  take  into  account  the  projects’ 
environmental impact.  

In  addition,  the  experience  in  the  Netherlands  shows  that  environmental  pre-qualification 
requirements prevent the risk of delays in project commissioning, having a positive impact on 

15 

 
 
the realisation rate.  However, in  countries where the administrative process  is  long, the ex-
ante  requirement  for  environmental  authorisation  might  make  the  tender  too  complex  and 
create a risk of undersubscription. 

Case study – Spain 

In 2020, Spain approved a set of regulations on the tender procedures for renewable energy. 
This  includes  an  obligation  for  bidders  in  a  tender  to  submit  a  strategic  plan  with  the 
estimates of the impact of the project on the industrial value chain, which is made public on 
the  website  of  the  Ministry  for  Ecological  Transition  and  Demographic  Challenge.  The 
strategic  plan  must  include  the  strategy  of  circular  economy  in  relation  to  the  treatment  of 
equipment at the end of its life and an analysis of the carbon footprint during the life cycle of 
the facilities, including the manufacture and transportation of the main equipment used. The 
aim of this requirement is to impose pre-qualification criteria that enable only projects whose 
supply  chains  are  in  line  with  a  predefined  emission  standard  to  participate.  As  a  result, 
tenderers are asked to demonstrate the capability to develop the project in harmony with the 
environmental  “externalities”,  achieving  the  maximum  possible  resource  efficiency  and 
operational excellence along the entire value-chain, eventually generating a positive impact, 
resulting from the plant development and construction. 

Conclusions for Dimension 5: Environmental impact 

  The  implementation  of  additional  environmental  aspects  through  design  elements  in 

the tender is not common in European auctions. 

  Examples  in  Italy  and  Netherlands  show  positive  cases  where  tendering  procedures 
provide a clear pre-qualification requirement or other design elements that ensure that 
the  environmental  implications  are  taken  into  account  before  the  final  decision  of 
awarding  the  projects  is  made.  The  development  of  specific  evaluation  criteria  and 
weights  as  key  award  criteria 
the 
implementation.  However,  in  case  of  improper  tender  design,  the  additional  criteria 
could lead to sub-optimal results in terms of cost-efficiency. 

the  effectiveness  of 

to  enhance 

tends 

  Such  environmentally  friendly  prequalification  criteria  and  designs  may  lead  to 
additional,  non-environment-related  effects  in  the  tendering  procedure,  such  as 
decreased cost efficiency (Italy) or potentially boosted realisation rates (Netherlands). 

3.6. Local acceptability 
The  performance  dimension  “ensure  local  acceptability”  pursuant  to  Article  4(8)(f)  of  the 
Renewable Energy Directive is understood as the approval by the public for the promotion of 
renewable  energy  at  local  community  level.  Examples  of  challenges  raised  against  wind 
farms include perceived noise pollution, possible associated harm to local wildlife caused by 
the turbines and the impact on landscape. Specific physical characteristics, such as the smell 
from biogas plants, are a frequent complaint from residents living near biogas plants. In the 
case  of  solar,  concerns  include  the  negative  effect  on  landscapes.  There  are  examples  of 
tender design options which can mitigate the challenges related to local acceptability through 
e.g.  promoting  the  sharing  of  the  benefits  of  renewable  energy  projects  with  the  local 
communities. These can be seen in the context of the best practices on community acceptance 

16 

 
 
 
and  involvement,  described  in  the  Commission’s  Guidance  on  speeding  up  permit-granting 
procedures.16 

Location-related pre-qualification criteria are now applied for wind power plants in  Poland, 
where municipalities declare their willingness to host the wind energy infrastructure. In this 
case the design element is an ex-ante involvement of local governments for making decisions 
on future onshore wind energy investments in consultation with the population. In Spain, the 
obligation  for  a  bidder  to  submit  a  strategic  plan,  referred  to  in  the  previous  dimensions, 
includes  estimations  of  the  impact  on  local  employment  and  the  opportunities  for  local 
business development.  

The  tendering  authorities  of  Germany,  Ireland  and  France  have  opted  to  design  rules  that 
enhance local acceptability by granting preferential treatment to energy communities.  

In the case of Germany, the favourable conditions envisaged in the past Renewable Energy 
Act fostered community-based ownership projects and the first three rounds until November 
2017 awarded over 90% of the total  auction  volume of 2 890 MW to energy communities’ 
projects.  However,  after  two  years,  only  167  MW  of  the  awarded  wind  capacity  projects 
obtained  a  building  permit.  In  addition,  a  large  proportion  of  the  capacity  was  awarded  to 
only  three  professional  multi-project  developers  that  cooperated  with  natural  persons  in  as 
many as 60 projects with a total volume of 1 GW, formally keeping a majority of the voting 
rights  for  the  citizens.  After  the  lenient  bidding  requirements  were  abolished,  the  share  of 
community projects in tenders declined significantly from 71-88 % of the bid volume in 2017 
to less than 16% at the end of 2018. 

A preferential treatment to energy communities is also designed in Ireland, where the tenders 
have  a  separate  category  to  facilitate  the  participation  of  energy  communities.  Such  ad  hoc 
basket  is  defined  together  with  the  introduction  of  size  thresholds,  whereby  the  aim  is  to 
avoid the discrimination of certain actors. Out of the 82 renewable energy projects awarded 
after  the  government  approved  the  results  of  the  first  tender,  seven  are  implemented  by 
energy  communities  (five  solar  energy  and  two  onshore  wind  community  projects).  As  a 
result, new professional project developers at local level were born and have engaged actively 
in creating these projects. 

In 2016 in France a specific citizen participation “bonus” was introduced, with the objective 
to  increase  public  acceptance.  To  be  eligible  for  the  bonus,  bidders  demonstrated  local 
participation  through  two  different  ownership  models:  (i)  the  amount  of  capital  held  by 
citizens;  or  (ii)  the  citizen  participation  in  the  overall  financing  of  the  project.  The  bonus 
consists of additional payment of 0.1 or 0.3 cent/kWh on top of the support cost, determined 
in  the  tender,  provided  over  the  full  contract  period  of  20  years.  An  average  of  36%  of  all 
awarded  projects  have  applied  for  the  bonus  since  2016  across  all  tender  rounds.  The 
experience shows that the bonus was successful in incentivizing project developers towards 
more  participatory  shareholding  structures.  The  involvement  of  natural  persons  in  the 
financing of renewable energy projects by professional project developers in France was done 
through  dedicated  crowdfunding  platforms.  Between  2014  and  2017,  funds  from  citizens 
mobilized for renewable energy projects through such platforms grew from EUR 120,000 to 

16 SWD/2022/0149 final, 18.5.2022. 

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EUR 20.5 million.  Nevertheless, some challenges emerged as well. This  bonus was  mainly 
used by  project  developers to  increase the chances of winning in  highly  competitive tender 
rounds. The bonus’ eligibility criterion according to which citizens need to have their primary 
residence in the same or bordering area of the project site creates challenges in regions with 
lower  population  densities.  Community  actors  are  usually  represented  only  indirectly  in  an 
aggregated form  in  the governance and project  developers are only bound by the eligibility 
criteria  to  receive  the  citizen  participation  bonus  for  three  years  from  the  date  of 
commissioning. 

Conclusion for Dimension 6: Local acceptability 

  The  tendering  procedures  may  provide  the  necessary  framework  to  ensure  local 
acceptability,  particularly  when  preferential  treatment  is  granted  to  certain  bidders 
that share the benefits of RES deployment with local communities and this treatment 
does not result in discriminatory advantage for local content. Projects that effectively 
involve  local  players  may  result  in  substantial  added  value  in  terms  of  local 
acceptance  and  access  to  additional  private  capital  which  results  in  greater 
participation (and investments) by citizens. Local engagement can facilitate the land 
acquisition process and thus ease the challenging pre-development phase (permitting). 
  EU-wide experience shows that energy community projects participate in auctions if 
some  preferential  treatment  is  provided.  However,  the  experience  with  the  special 
rules is not always positive. Examples in Germany showed that providing preferential 
rules which are not well designed may lead traditional developers to only artificially 
label their initiative as a community project.  

  Whereas the design of lenient  bidding requirements  (less  strict pre-qualification) for 
small-scale projects in the overall tender basket is likely to have distorting effects, the 
experience  with  a  separate  tender  basket  specifically  devoted  to  facilitate  the 
participation of a certain category is quite positive.  

  An incentive for increasing public acceptance for renewables in a broader sense is the 
participatory bonus to the project for the involvement of citizens in the financing and 
in the project governance. 

3.7. Security of supply and grid integration. 
The last performance dimension “ensure security of supply and grid integration” pursuant to 
Article 4(8)(g) of the Renewable Energy Directive is interpreted as the impact of tenders on  
keeping the stability of the energy system, balancing generation and demand  by taking into 
account generation variability from renewables to be integrated into the grid. 

This  dimension  is  again  linked  little  with  the  impact  of  tendering,  but  rather  with  external 
factors. Nevertheless, a few case studies show examples of how security of supply and grid 
integration are reflected in the tender design in order to facilitate not only the deployment of 
new  renewable  capacities,  but  also  their  effective  integration  into  the  system.  Beyond  the 
case  studies,  it  is  not  common  in  the  EU  to  incentivize  flexible  power  through  tenders  for 
renewables where generation is supplemented with storage technology. 

Case study – Portugal 

A solar PV tender in Portugal in 2019 was designed with specific features aimed at locating 
the  assets  where  they  may  relieve  congestions  in  the  system.  In  the  12  successive  tender 
rounds, potential producers competed  for  the  rights  of  grid  connection capacity  in different 

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fixed  locations  in  Portugal.  Effectively,  this  tender  supported  solar  PV  plants  through  the 
allocation  of  scarce  connection  capacities  rather  than  remuneration  for  production  of 
renewable electricity.  

The  tender  was  heavily  oversubscribed  for  almost  all  the  batches,  with  record-low  bids 
significantly  below  the  market  prices,  effectively  leading  to  pay-back  obligations  for  the 
producers.  For  the  tendered  1400  MW  grid  connection  capacity,  offers  totaling  10.19  GW 
were  made,  and  a  capacity  of  1150  MW  was  awarded.  The  gap  between  the  tendered  and 
awarded capacity is due to the fact that for one lot, no offers were received in the auction, and 
for another lot, only one offer was submitted. This shows that despite large oversubscription 
on average, bidders were not willing to bid for locations which are not attractive because of 
low renewables potential. Such  a  scenario shows an  important  disadvantage of site-specific 
auctions,  where  the  inappropriate  selection  of  locations  may  lead  to  undersubscribed 
outcomes, and in an extreme but realistic case – in zero submitted bids.  

On  the  other  hand  the  Portuguese  model  allows  for  an  optimal  allocation  of  the  generation 
with  regard  to  existing  grid  capacity.  In  a  system  with  shortage  of  available  connection 
points, the zone-specific  tender scheme suggests that  such design element  could  be a novel 
way  to  encourage  the  minimization  of  costs  and  to  integrate  large  amounts  of  variable 
renewables,  optimizing  constrained  transmission  infrastructure.  In  this  example,  the  aim  is 
not for renewable power plants to receive support on top of market price, but rather for the 
producers to compete for the allocation of scarce network connection capacities.  

Case study – Germany 

Germany introduced  a  specific tender design  addressing the  grid  connection of renewables. 
The location of the power plants is factored into the system for awarding the winners in the 
tender.  The  tenders  define  dedicated  transmission  network  expansion  areas  which  are 
significantly  overloaded  and  require  additional  upgrade  of  the  grid.  In  these  areas,  a 
maximum amount of renewable electricity output by wind projects is set, allowing  the new 
offshore or onshore wind projects awarded in tenders to align with  Germany’s transmission 
grid development plans. In addition, bids for projects located in one of those overloaded areas 
are penalised by adding a virtual premium to their bid prices, making them less competitive 
in the tender. 

The  second  type  of  tender  introduces  a  dedicated  basket  for  projects  combining  renewable 
energy generation and storage. In Germany, a first tender round of this kind was held in 2021, 
awarding  258  MW  of  capacity  to  18  projects  for  solar  PV  plants  with  energy  storage.  The 
tender  was  oversubscribed,  with  43  bids  for  a  total  volume  of  509  MW.  The  remuneration 
scheme was a fixed feed-in premium, meaning that the price should be added as a support on 
top of the market price. The bids were considerably lower than the tender’s ceiling price (75  
EUR/MWh)  whereby  the  awarded  bids  were  on  average  between  43  and  45  EUR/MWh. 
However, from the perspective of fixed feed-in premium tenders where in 2019 such a tender 
in Denmark resulted in an average price of 2 EUR/MWh, the values in the German example 
show  the  considerably  higher  support  cost  to  hybrid  projects  combining  generation  and 
storage.  

Conclusions for Dimension 7: Security of supply and grid integration 

  The  implementation  of  additional  grid  integration  and  security  of  supply  aspects 

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through additional design elements of the tender is not common in the EU. 

  Tendering  procedures  in  the  Union  have  not  provided  for  a  pipeline  for  projects 

combining renewable energy production and storage.  

  Renewable tenders across the Union are traditionally organised to assign price support 
for  generation  of  electricity  from  renewable  power  plants,  but  there  are  signs  this 
rationale  might  change.  The  zone-specific  schemes  in  Germany  and  the  case  of 
Portugal  suggest  that producers will start  to  compete for the  opportunity to  connect, 
optimizing  constrained  transmission  and  distribution  grid  infrastructure.  Similar 
tendencies are observed in the offshore sector. 

  Grid  expansion  takes  time  and  locational  design  elements  in  a  tender  can  help  to 
ensure that, while the network is being expanded, the connection of renewables is not 
stalled  by  constrained  network  infrastructure.  Clear  pre-qualification  requirements 
that ensure grid access may allow for better coordination between project construction 
and  the  required  grid  expansion,  but  in  some  instances  this  can  lead  to  less  intense 
competition.  

  From a system point of view, the zone-specific auction scheme could be a novel way 
to  encourage  the  minimization  of  costs  to  integrate  large  amounts  of  variable 
renewables  into  the  system  in  particular  in  countries  with  shortage  of  available 
connection points. In such an auction however, it may be necessary to also consider 
locational electricity pricing to drive project development in the most useful locations 
and in a cost effective manner. 

  Locational  incentives  (including  a  bonus/penalty  to  bids  located  in  areas  with 
available/insufficient grid capacities, maximum capacity quotas) in certain areas may 
succeed  in  avoiding  the  concentration  of  projects  in  resource-rich  but  potentially 
difficult-to-connect areas. 

4. Final conclusions 
The  most  important  general  conclusion  of  the  report  is  that  introduction  of  tenders  for 
renewables  was  a  clear  success  for  the  European  Union.  The  analysis  of  the  performance 
dimensions  shows  that  in  many  Member  States  the  tenders  reduced  the  support  cost 
significantly  compared  to  administrative  schemes,  enhanced  the  deployment  of  renewable 
capacities and provided a solid framework for technological improvement.  

The cost reduction seems to be clearly the dimension where tenders for renewables brought 
their largest benefit. Policy makers switched from offering administratively set feed-in tariffs 
to  competitive  bidding  systems  to  find  the  level  of  support  that  is  necessary,  and  thus  the 
allocation of the lowest possible subsidy for an energy or capacity product. The introduction 
of  market  forces  by  tendering  procedures  contributed  to  improved  price  discovery  and 
exercised pressure to  reduce the project  costs, which in  turn led to  lower support costs and 
reduced the burden on consumers and state budget. 

Tenders achieved positive results in terms of capacity additions, as well as in terms of high 
realization  rate  of  the  awarded  projects,  without  prejudice  to  additional  factors.  In  some 
countries,  the  introduction  of  tenders  was  the  regulatory  measure  which  triggered  the 
extensive deployment of some renewable technologies, while for many countries the tenders 
contributed to faster paced renewables deployment.  

As regards technological development, the role of tenders is less clear. They provided a solid 
framework  for  improvement  in  particular  for  those  countries  where  technology  was  not 

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mature  at  the  time  of  the  introduction  of  tenders.  However,  the  external  factors  related  to 
global  technology  trends  seem  to  be  the  main  factor  for  the  technological  development  of 
renewables.  

In  a  number  of  countries,  the  participation  of  small  actors  was  facilitated  through  specific 
tender  design  elements.  However,  where  thresholds  for  small-scale  projects  are  introduced, 
the cost-efficiency of the tender decreases and higher support cost levels are observed.  

Tenders can ensure that environmental implications other than emission reduction are taken 
into account before the final decisions of awarding the projects is made. Therefore, they can 
contribute to the achievement of different environmental objectives. Tenders can have effects 
also  in  terms  of  public  acceptance  for  renewables  and  security  of  supply.  Competitive 
procedures  can  contribute towards the  goals  of these last three dimensions  through  specific 
tender  design  elements  that  introduce  additional  selection  criteria.  However,  a  general 
conclusion  can  be  formulated  that  often  there  is  a  trade-off  between  the  introduced  design 
elements and price efficiency. 

Looking forward, on the basis of the evidence from the performance of tenders in the past, it 
can be expected that tendering schemes may face some challenges and transformations in the 
future. The recent results from solar PV and onshore tenders show that strike prices are very 
close,  in  some  cases  below  long-term  expected  wholesale  prices,  especially  when  the 
wholesale  prices  are  unexpectedly  high.  This  justifies  the  choice  of  two-sided  sliding 
premium as an option for tender design, in particular for mature technologies that are close 
to,  or  already  at  a  state  where  no  public  support  is  needed.  Since  tenders  were  originally 
organized  as  an  instrument  to  grant  support,  their  role  may  decline.  There  is  emerging 
evidence  that  PPAs  are  becoming  an  attractive  route  for  the  market-based  development  of 
renewable power projects. This will have implications for the design of auctions, which could 
face  lower  participation,  especially  in  markets  where  the  project  pipeline  for  renewables 
projects  is  relatively  small.  This  means  that  tendering  schemes  will  have  to  be  adapted  to 
become  complementary  to  or  synergetic  with  renewable  projects  that  are  (partly)  financed 
through PPAs.  

Even if tenders might become less relevant in terms of financial support, they would however 
keep their strategic role as an instrument to effectively disburse scarce resources. Examples 
such  as  the  auctions  of  Portugal  that  allocate  grid  connection  capacities  show  that  the 
tendering  process  can  be  redefined  and  linked  to  grid  integration  rather  than  to  its  original 
goal to allocate operational support.  

The further impact of tendering support schemes as an instrument to foster the deployment of 
renewables  and  thus  to  contribute  to  the  European  Green  Deal  objectives  and  the 
implementation of the REPowerEU plan, as well as the exact effects of the latest trends for 
tenders  remain  to  be  seen  and  would  be  described  in  the  next  report  by  the  Commission 
pursuant to Article 8(4) of the Renewable Energy Directive.  

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