Auctions for contracts to develop power-generation capacity have emerged as an essential policy instrument for many countries to promote the transition to renewable energy sources and technologies.
As the renewable energy sector matures, policies must be adapted to reflect changing market conditions. With the increasing use of auctions, policy makers seek to procure renewables-based electricity at the lowest price and also fulfil socio-economic objectives. Project developers who participate in the auction submit a bid with a price per unit of electricity at which they are able to realize the project. The government evaluates the offers on the basis of the price and other criteria and signs a power purchasing agreement with the successful bidder.

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