The encyclopedia · Strategy & Leadership · Strategic decision · 2015–2017
Germany replaced fixed solar feed-in tariffs with competitive auctions
Germany's first PV auction drew 170 bids for 150 MW and awarded support at 9.17¢/kWh — below the preset 11.29¢ cap.
Bundesnetzagentur · German Federal Ministry for Economic Affairs
The solution
Germany's renewable boom ran on feed-in tariffs set by parliament, and as solar expanded, the cost to consumers ballooned. The EEG 2014 reform began replacing administered rates with competition: new ground-mounted solar plants would receive funding only if they won an auction.
In the pilot round, completed in mid-April 2015, the Bundesnetzagentur auctioned 150 MW. It received 170 bids, awarded 25 totaling about 157 MW, and allocated support from the lowest bid upward against a preset ceiling of 11.29 cents per kWh. The average winning bid was 9.17 cents — below the cap, though slightly above the existing nine-cent feed-in tariff.
The ministry called the round proof that auctions work for renewables: heavy oversubscription showed developers accepted the instrument, and the ceiling had bitten. Winners had two years to build, with their bid fixed for 20 years, and an evaluation was promised before extending auctions to other technologies.
Why it worked
- Auctions let developers reveal the true cost of support instead of accepting a fixed rate.
- Awarding from the lowest bid up made oversubscription push prices down.
- A two-year build window and 20-year fixed payment kept bids honest and financeable.
- A published ceiling gave bidders a clear target to undercut.
What can be applied
If you must subsidize, do not guess the price — auction it; even a first pilot round shows the market prices support better than a ministry.
Aftermath
PV auctions became Germany's permanent model and were extended to wind and other technologies; combined with falling module costs, later rounds pushed solar support far below the pilot's level.
Sources
- First solar auction sees price above current feed-in tariff
- Auction procedure for photovoltaics projects: first round successfully completed
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