Monday, January 18, 2021
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2021: the year of renewable auctions in the EU

According to research and consultancy group Wood Mackenzie, thanks to the European Green Deal, policymakers and market players will make further steps towards the delivery of net-zero objectives: the ambitious targets will generate a race in renewable auctions in Europe, already from the beginning of 2021.

Wood Mackenzie reported that there is a 45 gigawatts (GW) capacity in the pipeline, which includes 17 and 6 GW energy generated by wind and PV power respectively. Of course, it is not sure that the targeted volumes will be achieved, but in the past years, European auctions had an average award rate of 70 per cent, which would mean a 30 GW of capacity awarded for 2021.

Biddings for 2021 probably will include the UK’s fourth allocation round, through which the country is targeting 12 GW, with onshore wind and solar PV in the scheme. From Spain, Mackenzie expects approximately 8 GW target, because of the delayed 2020 auction. There are also freshmen, just like Poland, with its first offshore wind auction of 5.9 GW, complemented by onshore wind and solar PV auctions, which altogether are reaching a total of 8 GW.

“Clearly, wind and solar PV will represent a vast majority of capacity procured in 2021,” said Rory McCarthy, Wood Mackenzie senior research manager. “Whilst delivering low-cost, low-carbon power in abundance, the non-dispatchable nature of these technologies presents a flexibility challenge to power systems. This has already started to manifest in several markets, with negative day-ahead and intra-day power prices occurring during periods of high non-dispatchable renewable generation and low demand. Coronavirus-related demand issues aside, expect the frequency of negative prices to increase.”

The non-dispatchable characteristic of wind power and solar PV technologies will set up a flexibility challenge for power systems because they expected to represent most of the capacity procured through auctions in Europe in 2021.

Mr McCarthy highlighted that there is a real need for diversity in the national supplies, because of the continually growing wind and solar outputs and their impact on the market balance.

“Key developments in this area will include: the Trans European Replacement Reserves Exchange (TERRE), day-ahead market coupling, physical interconnector development and, of course, the Brexit elephant in the room,” added Mr McCarthy.

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