Publication: Promoting Renewable Energy through Auctions : The Case of China
Loading...
Published
2014-06-13
ISSN
Date
2014-06-17
Author(s)
Editor(s)
Abstract
This knowledge note singles out auctions as an important mechanism that has been implemented in a growing number of countries in recent decades. It features a case study of auctions designed to promote the generation of electricity from renewable sources in China. Although feed-in tariffs are now the cornerstone of China's renewable energy policy, auctions have played and continue to play a role in identifying market prices for renewable energy in the country. Experience with the auctioning of wind and solar concessions enabled the Chinese authorities to modify auctions over time to yield accurate information about the costs of generation from renewable sources, allowing them to set feed-in tariffs at efficient levels. This case study is interesting, because China has set aggressive renewable energy targets and introduced policy incentives for rapid market development. Initial renewable energy prices showed significant variation, and the government s targets were not achieved prior to 2005. The most important milestone in the development of renewable energy in China was the 2005 Renewable Energy Law. China has applied successive adjustments to concessions auctions to improve their usefulness in setting appropriate feed-in tariffs. The key lesson from China's experience with auctioning of concessions is that winning bid prices that are lower than actual costs wind up deterring the development of renewable energy.
Link to Data Set
Citation
“Wang, Xiaodong; Barroso, Luiz; Elizondo, Gabriela. 2014. Promoting Renewable Energy through Auctions : The Case of China. Live Wire, 2014/14. © World Bank. http://hdl.handle.net/10986/18676 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Publication Shared Infrastructure for Clean Hydrogen(Washington, DC: World Bank, 2025-08-31)Studies of the development of clean hydrogen have often focused on the production side. Infrastructure built and used for storage and transportation warrants more attention. Among the topics that should be assessed are system design, operation, integration, and ownership; market design and governance; and planning. This Live Wire examines case studies and literature on the infrastructure for hydrogen hubs, with an emphasis on the benefits of shared infrastructure. Given the breadth of hydrogen production and infrastructure, the focus is on renewable hydrogen production for domestic use and for export after conversion to ammonia.Publication Decarbonizing Ammonia and Nitrogen Fertilizers with Clean Hydrogen(Washington, DC: World Bank, 2025-03-12)Synthetic fertilizers are essential to sustaining the world’s population, but their production is responsible for 1.8–2.4 percent of global greenhouse gas emissions. Clean hydrogen holds growing potential (amid falling costs) to decarbonize fertilizer production. Hydrogen produces synthetic ammonia, a building block of most fertilizers. With the fertilizer market as a reliable off-taker, this shift could support the overall expansion of clean hydrogen, even as it boosts global food security. However, this transition may require adjustments, including changes in fertilizer types and modifications to existing subsidy schemes.Publication A Responsible Data Sharing Framework for the Distributed Renewable Energy Sector(Washington, DC: World Bank, 2025-09-25)In collaboration with Nigeria’s Rural Electrification Agency, the World Bank is piloting a Responsible Data Sharing Framework (RDSF) for the distributed renewable energy sector. The framework was developed over the course of 12 months in 2024, through collaboration with some 25 stakeholders from government and the private sector. It embodies a shared ambition to turn data into better outcomes for the communities served. At its core, an RDSF for the sector sets out how appropriate data about projects can be shared in ways that are efficient and effective. In 2023, the World Bank approved the Nigeria Distributed Access through Renewable Energy Scale-up (DARES) project. DARES aims to bring new or improved access to clean energy to 17.5 million people and replace more than 280,000 petrol and diesel generators in the process. The RDSF pilot is part of DARES.Publication Measuring the Climate Resilience of the Power Sector: Harmonization, Not Homogenization(Washington, DC: World Bank, 2025-08-31)Although by its very nature climate resilience can never be fully “standardized”, the development and mainstreaming of climate resilience metrics can benefit from greater consensus around key topics. Areas such as metric categories, methodologies, and reporting frameworks can be aligned through coordinated efforts among regulators, utilities, and other stakeholders, enabling more consistent, effective, and scalable resilience planning across the sector. The key is harmonization and not homogenization.Publication Using Biomass or Green Ammonia to Replace Coal in Existing Thermal Power Plants(Washington, DC: World Bank, 2024-06-06)Finding fuel sources to replace coal in power plants is crucial in the march toward decarbonization. Biomass and ammonia are two options offering significant potential. Both can be used with coal or alone in newly constructed facilities or in modified power plants. Relatively new power plants are good candidates for modification. While work is underway demonstrating the feasibility of each material, there are logistical challenges to address, particularly in the case of ammonia.
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Performance of Renewable Energy Auctions : Experience in Brazil, China and India(World Bank Group, Washington, DC, 2014-10)This paper considers the design and performance of auction mechanisms used to deploy renewable energy in three emerging economies: Brazil, China, and India. The analysis focuses on the countries' experience in various dimensions, including price reductions, bidding dynamics, coordination with transmission planning, risk allocation strategies, and the issue of domestic content. Several countries have turned to public competitive bidding as a mechanism for developing the renewable generation sector in recent years, with the number of countries implementing some sort of auction procedure rising from nine in 2009 to 36 by the end of 2011 and about 43 in 2013. In general, the use of auctions makes sense when the contracting authority expects a large volume of potentially suitable bids, so that the gains from competition can offset the costs of implementation. A study of the successes and failures of the particular auction design schemes described in this paper can be instrumental in informing future policy making.Publication Promoting Renewable Energy through Auctions(World Bank, Washington, DC, 2014-06-13)This knowledge note singles out auctions as an important mechanism that has been implemented in a growing number of countries in recent decades. It features case studies of auctions designed to promote the generation of electricity from renewable sources in Brazil, China, and India. Auctions in various forms are being used to promote the generation of electricity from renewable sources. Properly structured auctions can avoid the disadvantages of feed-in tariffs and renewable purchase obligations. Moreover, they offer the best of both of these early mechanisms, providing stable revenue guarantees for investors while also avoiding the risk of overbuilding. They do this by determining both price and quantity in advance. Promoting renewable energy through auctions is important, because experience with the use of auctions can guide future efforts. Among the examples of the benefits to be obtained from generating electricity from renewable sources are (i) increasing countries' energy security by reducing their dependency on fossil fuel imports, (ii) reducing greenhouse gas emissions as part of a worldwide effort to mitigate climate change, (iii) promoting electrification while reducing the need for isolated applications such as diesel generators, and (iv) minimizing local pollution. Auctions are an effective way to stimulate competition among investors, provide price disclosure while eliciting the right amount of investment, and offer revenue stability via long-term contracting.Publication Promoting Renewable Energy through Auctions : The Case of Brazil(World Bank, Washington, DC, 2014-06-13)This knowledge note singles out auctions as an important mechanism that has been implemented in a growing number of countries in recent decades. It features a case study of auctions designed to promote the generation of electricity from renewable sources in Brazil. The Brazilian experience with wind energy auctions illustrates that even carefully designed policies often must be reconsidered in the light of a complex and changing environment. Many considerations need to be taken into account to ensure competitive prices while also delivering the required renewable energy supply. This case study is interesting, because Brazil's initial success with developing wind capacity had unforeseen consequences. Challenges introduced in the first stage of wind power development had to be solved in the second. The chief challenges were (i) the Brazilian system had to be able to balance supply and demand more accurately; (ii) investors were overoptimistic about the amount of electricity able to be generated; and (iii) the government's arrangements for coordinating the planning of generation and transmission left too little room for error. The benefits offered to the auctioned plants were reduced, as was government involvement in planning and coordinating transmission expansion. The key lesson from this case study is that existing policies should be challenged and revised in response to a changing environment.Publication Design and Performance of Policy Instruments to Promote the Development of Renewable Energy : Emerging Experience in Selected Developing Countries(Washington, DC: World Bank, 2012)This report summarizes the results of a recent review of the emerging experience with the design and implementation of policy instruments to promote the development of renewable energy (RE) in a sample of six representative developing countries and transition economies ('developing countries') (World Bank 2010). The review focused mainly on price- and quantity-setting policies, but it also covered fiscal and financial incentives, as well as relevant market facilitation measures. The lessons learned were taken from the rapidly growing literature and reports that analyze and discuss RE policy instruments in the context of different types of power market structures. The analysis considered all types of grid-connected RE options except large hydropower: wind (on-shore and off-shore), solar (photovoltaic and concentrated solar power), small hydropower (SHP) (with capacities below 30 megawatts), biomass, bioelectricity (cogeneration), landfill gas, and geothermal. The six countries selected for the review included Brazil, India, Indonesia, Nicaragua, Sri Lanka, and Turkey.Publication Doubling the Share of Renewable Energy in the Global Energy Mix(2014-09-18)Developed and developing countries alike are increasingly motivated by the benefits offered by renewable energy, including enhanced energy security, reduced greenhouse gas emissions and local envi¬ronmental impacts, increased economic and industrial development, and more options for reliable and modern energy access. Today, about 120 countries, more than half of them developing coun¬tries have a national target related to renewable energy. Moreover, 88 countries have introduced price- or quantity-based incentives for renewable energy. Just over half of those countries are developing. Doubling the share of renewable energy in the global energy mix is one of the three complementary objectives of the Sustainable Energy for All (SE4ALL) initiative. Formally launched in the UN General Assembly in September 2012 and co-chaired by the president of the World Bank Group and the UN Secretary-General, SE4ALL calls on governments, businesses, and civil society to address urgent energy challenges, including increasing the use of renewable energy, by 2030.
Users also downloaded
Showing related downloaded files
Publication Digital Africa(Washington, DC: World Bank, 2023-03-13)All African countries need better and more jobs for their growing populations. "Digital Africa: Technological Transformation for Jobs" shows that broader use of productivity-enhancing, digital technologies by enterprises and households is imperative to generate such jobs, including for lower-skilled people. At the same time, it can support not only countries’ short-term objective of postpandemic economic recovery but also their vision of economic transformation with more inclusive growth. These outcomes are not automatic, however. Mobile internet availability has increased throughout the continent in recent years, but Africa’s uptake gap is the highest in the world. Areas with at least 3G mobile internet service now cover 84 percent of Africa’s population, but only 22 percent uses such services. And the average African business lags in the use of smartphones and computers as well as more sophisticated digital technologies that catalyze further productivity gains. Two issues explain the usage gap: affordability of these new technologies and willingness to use them. For the 40 percent of Africans below the extreme poverty line, mobile data plans alone would cost one-third of their incomes—in addition to the price of access devices, apps, and electricity. Data plans for small- and medium-size businesses are also more expensive than in other regions. Moreover, shortcomings in the quality of internet services—and in the supply of attractive, skills-appropriate apps that promote entrepreneurship and raise earnings—dampen people’s willingness to use them. For those countries already using these technologies, the development payoffs are significant. New empirical studies for this report add to the rapidly growing evidence that mobile internet availability directly raises enterprise productivity, increases jobs, and reduces poverty throughout Africa. To realize these and other benefits more widely, Africa’s countries must implement complementary and mutually reinforcing policies to strengthen both consumers’ ability to pay and willingness to use digital technologies. These interventions must prioritize productive use to generate large numbers of inclusive jobs in a region poised to benefit from a massive, youthful workforce—one projected to become the world’s largest by the end of this century.Publication World Development Report 2017(Washington, DC: World Bank, 2017-01-30)Why are carefully designed, sensible policies too often not adopted or implemented? When they are, why do they often fail to generate development outcomes such as security, growth, and equity? And why do some bad policies endure? This book addresses these fundamental questions, which are at the heart of development. Policy making and policy implementation do not occur in a vacuum. Rather, they take place in complex political and social settings, in which individuals and groups with unequal power interact within changing rules as they pursue conflicting interests. The process of these interactions is what this Report calls governance, and the space in which these interactions take place, the policy arena. The capacity of actors to commit and their willingness to cooperate and coordinate to achieve socially desirable goals are what matter for effectiveness. However, who bargains, who is excluded, and what barriers block entry to the policy arena determine the selection and implementation of policies and, consequently, their impact on development outcomes. Exclusion, capture, and clientelism are manifestations of power asymmetries that lead to failures to achieve security, growth, and equity. The distribution of power in society is partly determined by history. Yet, there is room for positive change. This Report reveals that governance can mitigate, even overcome, power asymmetries to bring about more effective policy interventions that achieve sustainable improvements in security, growth, and equity. This happens by shifting the incentives of those with power, reshaping their preferences in favor of good outcomes, and taking into account the interests of previously excluded participants. These changes can come about through bargains among elites and greater citizen engagement, as well as by international actors supporting rules that strengthen coalitions for reform.Publication Poverty, Prosperity, and Planet Report 2024(Washington, DC: World Bank, 2024-10-15)The Poverty, Prosperity, and Planet Report 2024 is the latest edition of the series formerly known as Poverty and Shared Prosperity. The report emphasizes that reducing poverty and increasing shared prosperity must be achieved in ways that do not come at unacceptably high costs to the environment. The current “polycrisis”—where the multiple crises of slow economic growth, increased fragility, climate risks, and heightened uncertainty have come together at the same time—makes national development strategies and international cooperation difficult. Offering the first post-Coronavirus (COVID)-19 pandemic assessment of global progress on this interlinked agenda, the report finds that global poverty reduction has resumed but at a pace slower than before the COVID-19 crisis. Nearly 700 million people worldwide live in extreme poverty with less than US$2.15 per person per day. Progress has essentially plateaued amid lower economic growth and the impacts of COVID-19 and other crises. Today, extreme poverty is concentrated mostly in Sub-Saharan Africa and fragile settings. At a higher standard more typical of upper-middle-income countries—US$6.85 per person per day—almost one-half of the world is living in poverty. The report also provides evidence that the number of countries that have high levels of income inequality has declined considerably during the past two decades, but the pace of improvements in shared prosperity has slowed, and that inequality remains high in Latin America and the Caribbean and Sub-Saharan Africa. Worldwide, people’s incomes today would need to increase fivefold on average to reach a minimum prosperity threshold of US$25 per person per day. Where there has been progress in poverty reduction and shared prosperity, there is evidence of an increasing ability of countries to manage natural hazards, but climate risks are significantly higher in the poorest settings. Nearly one in five people globally is at risk of experiencing welfare losses due to an extreme weather event from which they will struggle to recover. The interconnected issues of climate change and poverty call for a united and inclusive effort from the global community. Development cooperation stakeholders—from governments, nongovernmental organizations, and the private sector to communities and citizens acting locally in every corner of the globe—hold pivotal roles in promoting fair and sustainable transitions. By emphasizing strategies that yield multiple benefits and diligently monitoring and addressing trade-offs, we can strive toward a future that is prosperous, equitable, and resilient.Publication Classroom Assessment to Support Foundational Literacy(Washington, DC: World Bank, 2025-03-21)This document focuses primarily on how classroom assessment activities can measure students’ literacy skills as they progress along a learning trajectory towards reading fluently and with comprehension by the end of primary school grades. The document addresses considerations regarding the design and implementation of early grade reading classroom assessment, provides examples of assessment activities from a variety of countries and contexts, and discusses the importance of incorporating classroom assessment practices into teacher training and professional development opportunities for teachers. The structure of the document is as follows. The first section presents definitions and addresses basic questions on classroom assessment. Section 2 covers the intersection between assessment and early grade reading by discussing how learning assessment can measure early grade reading skills following the reading learning trajectory. Section 3 compares some of the most common early grade literacy assessment tools with respect to the early grade reading skills and developmental phases. Section 4 of the document addresses teacher training considerations in developing, scoring, and using early grade reading assessment. Additional issues in assessing reading skills in the classroom and using assessment results to improve teaching and learning are reviewed in section 5. Throughout the document, country cases are presented to demonstrate how assessment activities can be implemented in the classroom in different contexts.Publication The Journey Ahead(Washington, DC: World Bank, 2024-10-31)The Journey Ahead: Supporting Successful Migration in Europe and Central Asia provides an in-depth analysis of international migration in Europe and Central Asia (ECA) and the implications for policy making. By identifying challenges and opportunities associated with migration in the region, it aims to inform a more nuanced, evidencebased debate on the costs and benefits of cross-border mobility. Using data-driven insights and new analysis, the report shows that migration has been an engine of prosperity and has helped address some of ECA’s demographic and socioeconomic disparities. Yet, migration’s full economic potential remains untapped. The report identifies multiple barriers keeping migration from achieving its full potential. Crucially, it argues that policies in both origin and destination countries can help maximize the development impacts of migration and effectively manage the economic, social, and political costs. Drawing from a wide range of literature, country experiences, and novel analysis, The Journey Ahead presents actionable policy options to enhance the benefits of migration for destination and origin countries and migrants themselves. Some measures can be taken unilaterally by countries, whereas others require close bilateral or regional coordination. The recommendations are tailored to different types of migration— forced displacement as well as high-skilled and low-skilled economic migration—and from the perspectives of both sending and receiving countries. This report serves as a comprehensive resource for governments, development partners, and other stakeholders throughout Europe and Central Asia, where the richness and diversity of migration experiences provide valuable insights for policy makers in other regions of the world.