The FINANCIAL — The European Bank for Reconstruction and Development (EBRD) and the Energy Community Secretariat (EnCS) have issued on March 26 joint Policy Guidelines to help countries design and implement competitive selection processes for supporting renewable energy. The Policy Guidelines have been prepared in collaboration with the International Renewable Energy Agency (IRENA).
Across the world, countries are using competitions to set the level of support for, and select the recipients of, renewable electricity. These competitions are driving down the cost of renewable energy with great success, in many cases to below the cost of conventional power. But careful design of these competitions is crucial, both to ensure their success and to avoid distorting the rest of the energy market. The new policy guidelines set out best practice for the key design principles of such competitions, according to the EBRD.
Commenting on the policy guidelines, Janez Kopač, Director of the EnCS, said: “Our cooperation with the EBRD and IRENA has set a new standard. Merging forces – that is, knowledge of the rule of law, practical expertise and financing – made it possible to design policy guidelines that will truly ensure the cost-effectiveness of renewable energy deployment. Renewables support schemes must be compatible with state aid rules to allow fair competition on the market. Only such an approach will pave the way for a sustainable energy future in the Energy Community and beyond.”
Harry Boyd-Carpenter, Director of Power and Energy Utilities at the EBRD, said: “We have seen first hand how successful competitions can be in stimulating innovation and efficiency, resulting in record low prices for renewable energy. This is a very exciting development in the fight against climate change. We are delighted to have been able to partner with the Energy Community Secretariat and benefit from the support and guidance of IRENA in setting out the key parameters to make such auctions successful.”
Through collaboration with IRENA, the policy guidelines have benefited from the agency’s extensive work and expertise on designing different elements of renewable energy auctions.
“One of the most significant recent policy developments is the growing popularity of renewable energy auctions,” said Adnan Z. Amin, IRENA Director-General. “Countries are turning to auctions as an instrument of choice to reach a competitive price for renewable energy electricity while achieving socio-economic and environmental benefits. These policy guidelines provide a critical design tool for countries as they seek to accelerate sustainable and affordable renewable energy solutions.”
The policy guidelines are already being reflected in the work of the EBRD and EnCS – most notably in Albania and FYR Macedonia, where the EBRD is providing assistance to authorities that is underpinned by the policy guidelines; and in Ukraine, where the policy guidelines are informing discussions on the policy framework for supporting renewables.
Further assistance is planned to help Energy Community countries transition to support frameworks that rely on competitive procurement. The EBRD expects this to provide important guidance for its work in renewable energy throughout the economies where it invests.