Non-Price Criteria in Renewable Energy Auctions and Consequences for the European Solar PV Industry: Non-Price Criteria in Renewable Energy Auctions and Consequences for the European Solar PV Industry

Thibault Deletombe

No 2153, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: The Net Zero Industry Act (NZIA) promotes non-price criteria in renewable auctions. It aims to unlock green willingness-to-pay and scale up manufacturing capacity for net-zero technologies in the European Union (EU). This paper builds a partial equilibrium model of the European solar module sector and investigates how renewable auction design impacts solar photo- voltaic (PV) manufacturing. First, a formal analysis evaluates the complementarities between the different non-price criteria. Most notably, we find that if local manufacturing development is aligned with climate goals, then non-price criteria in solar auctions do not necessarily increase costs to consumers. Then, a numerical simulation estimates solar module production in 2030 based on NZIA targets, considering various degrees of market integration within the EU. The results show that market fragmentation can inhibit economies of scale and thus increase solar PV manufacturing costs by €2 billion per year. The development of a common framework for the implementation of non-price criteria at the country level is a no-regret solution. Leveraging the common European market with an integrated policy approach represents the first-best strategy. Forming coalitions of willing Member States is a second-best strategy that can significantly reduce fragmentation costs.

Keywords: renewable auction; non-price criteria; market integration; photovoltaics; solar modules (search for similar items in EconPapers)
JEL-codes: L51 L52 L60 Q27 Q40 (search for similar items in EconPapers)
Pages: 36 p.
Date: 2026
New Economics Papers: this item is included in nep-reg
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