Competitive Tendering for Renewables and Industrial Decarbonisation

Estelle Cantillon and Giancarlo Spagnolo

No 21628, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Competitive tendering of state aid is a tool for governments to ensure that aid is awarded efficiently and at the least cost for public finances. In the context of aid for investment in renewables and industrial decarbonisation, competitive bidding offers important advantages over administratively set support schemes: it improves cost-effectiveness by keeping support close to each project’s funding gap; it enhances efficiency by selecting the projects with the highest social value; and it supports transparency, limiting the scope for regulatory capture. This note discusses auction and contract design principles, with an emphasis on how to ensure effective competition and on recent developments in addressing bidder and project heterogeneity, risk, and multi-source funding.

JEL-codes: D44 H57 Q42 Q58 (search for similar items in EconPapers)
Date: 2026-06
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