The Role of Competitive Auctions as a Policy Tool for Renewable Energy Development in Brazil and Mexico
Competitive tendering schemes have become a preferred method of contracting renewable energy generation capacity internationally. As of early 2015, at least sixty countries had adopted renewable energy tenders, compared to just six countries in 2005 (IRENA). However, there has been little research on the subject compared with the importance and prominence of the issue. The aim of this study is to fill this research gap by examining the Brazilian and Mexican experiences in developing renewables, and how the tendering programs help governments achieve policy objectives and net benefits for their respective societies. Fundamentally, our study seeks to shed light on two simple questions: are auctions the most efficient way to deploy renewables, and how can auctions be improved further? We provide a historical assessment of renewable development policies in both Brazil and Mexico, review renewable auction structures and results in both countries, and offer specific recommendations for the future design and implementation of renewable energy policy tools, and auctions in particular.