Plans to introduce an auctioning system for renewable technologies should be brought forward, according to a new report by conservative think tank Policy Exchange.
The report, Going, Going, Gone: Auctions for renewable energy, argues that planned technology specific auctions set to be introduced under the Electricity Market Reform (EMR) need to be introduced earlier than current proposals which will see them introduced from 2018 for projects commissioning after 2020.
The Policy Exchange paper follows comments reported in The Telegraph by the energy secretary Ed Davey, in which he implied that the Department of Energy and Climate Change (DECC) will introduce technology-specific auctions a lot quicker than initially thought. He is reported to have said: “Onshore [wind] and solar are going to competitive auctions very quickly”.
Commenting on the need for auctions, Simon Moore, author of the Policy Exchange report said that the government needed to “act ruthlessly” and cut state support for renewables to help reduce household energy bills.
Speaking to Solar Power Portal, Paul Thompson, head of policy at the Renewable Energy Association urged caution over potentially fast-tracking auctions, he said: “We support the gradual transition to auctions as a means of driving down costs and making policy more cost-effective.
“If the government rushes this transition though, that will undermine the certainty which contracts for difference (CfDs) are supposed to provide – and heightened uncertainty leads to increased risk and increased cost. The design is also crucial as it must allow earlier stage technologies to scale up and achieve cost reductions before they can compete on price alone. We are engaging very actively in this area.”
Solar Power Portal understands that DECC is readying an announcement intended to provide more clarity for EMR soon but it is still unclear whether the department is preparing plans to fast-track reverse auctions for onshore and solar technologies.