Non-Price Criteria in Renewable Energy Auctions

Kirsty Watt of consultants OWC has written a piece on the growing trend around the world to factor in Non- Price Criteria into auctions for renewable energy support mechanisms (in the article's particular case, offshore wind).

In the UK, it is certainly the case that we have seen a greater emphasis on this, but arguably that is coming from a low base.  For larger projects we have had the concept of supply chain plans under the Government's renewable electricity Contract for Difference for quite some time, but it has not translated into the home grown manufacturing industry that everyone had hoped for.  More recently we have had supply chain impacts as a consideration for awards under the Hydrogen Business Model, but in most cases it still comes down to money and bids.

As Kirsty points out, a drive on supply chain growth as conditions to awards is more complicated than it first seems as it can have the effect of pushing the cost of a project up considerably and sometimes it just does not make sense to push for elements of a supply chain that a country is not ideally suited to providing.  A few points from me in no particular order;

• if we are serious about supply chain growth (particularly in manufacturing) then we need a proper industrial strategy and in the UK we have not had one of them for a while
• the success of supply chain conditions or pre-qualifications for support is dependent on monitoring and holding winning bidders to account on promises through a project
• measuring success of support rounds on how much the cost has been driven down doesn't help grow new UK supply chains
• Supply chains develop in my experience, around deployment - so for new Net Zero technologies the quicker we can get the first projects deployed the better chance we have of persuading people to invest in facilities to support those projects
• Energy security should be pushing this topic right up the agenda

I recognise of course, that it is more complicated than that and in the UK in particular, we often focus on the supply chain we have lost or not created rather than celebrating the huge successes  there have been.  My firm alone now employs over 100 people that focus on renewable energy projects and we are part of “the supply chain."   

Thanks Kirsty and OWC for the article and stimulating the debate.     

Non-Price Criteria (NPC) has emerged as a pivotal element in many auctions,

https://owcltd.com/media/blog/from-price-to-progress-impacts-of-evolving-offshore-wind-auction-criteria/?utm_content=From+Price+to+Progress%3a+Impacts+of+evolving+offshore+wind+auction+criteria