Selling a Just and Resilient Transition? Justice and Resilience Criteria in European Renewable Energy Auctions
Policy Analysis
Political Economy
Social Justice
Energy Policy
Abstract
In recent years, auctions have become the dominant tool for renewable energy (RE) deployment. Amid a global resurgence of industrial policy, auction design is increasingly leveraged to pursue broader policy goals. Notably, non-price criteria —factors beyond bid prices— are gaining prominence in RE auctions. While this shift has attracted scholarly attention, existing research remains limited in scope, both theoretically and empirically. Extant studies focus mostly on local content requirements, overlooking other factors such as resilience and justice criteria. Furthermore, while the effects of choices in auction design have been studied, less is known about why states use non-price criteria in auctions. Empirically, research often examines single RE sectors in isolation. To bridge these gaps, we pose the question “To what extent are justice and resilience criteria incorporated in European RE auctions, and how can their use be explained?”
Our contributions are twofold. First, we offer a novel empirical mapping of all European RE auctions along resilience and justice axes, measuring the degree to which these criteria are incorporated in RE auction design. We conceptualize resilience criteria as auction measures that strengthen a country’s security of supply (i.e. diversification and local content requirements). They are operationalized as ordinal variables, whereby local content requirements are seen as stricter than diversification requirements. Justice criteria are conceptualized as measures of distributional, procedural and recognition-based justice that promote a socially just transition, leaving no-one behind. The extent to which they are present increases with the number of the three abovementioned dimensions of justice measures present. We examine all RE auctions for on- and offshore wind, hydrogen, and solar photovoltaics in the EU and UK , building on existing datasets on auctions like the AURES II database, and WindEurope's dataset on onshore and offshore wind energy auctions. These cases are operationalized by coding legislation, policy and tender documents in NVivo.
Second, we explain trends and divergences across technologies, countries, and time. We put forward three hypotheses. First, market maturity (operationalized as installed capacity) can explain differences between RE technologies. States will refrain from using non-price criteria in auctions for immature technologies to limit the burden on emerging sectors. Second, divergences across countries can be explained through domestic factors. Countries with ambitious industrial policy goals will incorporate stricter resilience criteria as this helps strengthening their domestic manufacturers. Third, evolution over time can be explained through policy diffusion and policy competition. The former can occur when states copy other countries’ successful experiences with integrating justice and/or resilience criteria. The latter occurs when states respond to the inclusion of justice and resilience criteria in other states by launching simple auction designs without non-price criteria to lure bidders to their auctions.
In sum, by mapping and explaining the use of justice and resilience criteria in European RE auctions, we contribute to the growing literatures on non-price criteria and the application of industrial policy.