Auctions should incentivise a faster expansion of wind energy and developers’ plans should be weighed on qualitative criteria as well as the price of their projects, according to industry leaders.
To date, the focus of tenders has been to help reduce the cost of wind power, according to panellists speaking at WindEurope’s annual conference in Bilbao, Spain.
This has been achieved through technological development innovation, but Mark Guilianotti, managing director of the Green Investment Group, said cost reductions “may have gone too far”, with many turbine manufacturers and even developers facing heavy losses and squeezed profit margins.
The panellists said issues such as struggling European supply chains, the need for energy security exposed by Russia’s invasion of Ukraine, and higher renewable energy targets in the EU, meant it was now time for a rethink.
Danielle Jarski, chief development officer for offshore wind at RWE, said: “Now, we are entering a new phase. Price [should not be] the only decisive component going forward.
“It's about energy security but also about the steady and very steep build-out we have in front of us.
She added: “For this, we need an environment which provides a framework for those long-term investments: a stable setting where we know how the business cases are actually looking.”
Despite rapid cost reductions being achieved, there will still be a place for wind power tenders going forward – especially as some companies do not have the scale or capabilities for contracting corporate power purchase agreements (PPAs), said Jorge Casilas, ’ regulations and markets director for EDP Renewables.
Meanwhile, Rachel Ruffle, chief executive of Europe, Middle East and Asia region, for RES, said tenders’ ability to create a floor price would be helpful for wind power developers going forward.
But tenders should be technology-specific – and not pit wind power against solar PV – said speakers on the panel, called ‘Auctions: what should they reward and incentivise?’.
panellists suggested that system integration, sustainability and technological innovation could be key non-price criteria for tenders, while maritime spatial planning could be an important consideration for offshore wind rounds.
Enrique Pedrosa, chief operating officer for Europe and Latin America, for Repsol, said tenders should incentivise greater electricity production and benefits to local communities.
But above all, auction design and scheduling should incentivise an accelerated expansion of wind power and should provide clarity and transparency to developers, said Jarski.
Ruffle suggested that regular auctions, scheduled well in advance, can give developers greater visibility and certainty when planning and investing in project development.
She added that regular auctions can also help in today’s challenging market, which is characterised by cost inflation for raw materials and transportation and supply chain bottlenecks. She added that regular auctions could help developers to narrow the time between setting prices for materials and services and signing contracts.