This knowledge note singles outauctions as an important mechanism that has been implementedin a growing number of countries in recent decades. Itfeatures a case study of auctions designed to promote thegeneration of electricity from renewable sources in India.The country's national- and state-level experience withauctions of solar energy products both large and smallattests to the flexibility and adaptability of auctionmechanisms. Under the National Solar Mission, auctions havebeen implemented with good results in a variety of settings.Lessons include the importance of clear ideas about keygoals and objectives, and about areas where sacrifices canbe made. Experience in several states has also underlinedthe importance of regulatory stability. This case study isinteresting, because India's National Solar Mission ledto concurrent implementations of renewable auction schemes.Both national- and state-level auctions have led tosuccessful projects. The Indian central government'sexperience with auction implementations can be split intothree main segments. Phase 1 auctions concern centralizedauctions for procuring utility-scale solar plants. Rooftopauctions concern central government conducted auctions forrooftop solar generation in specific cities. No centralizedauctions for large-scale solar generation were conducted in2012 or 2013, so phase 2 auction were created under a newbidding process. Successive delays that were observed in theimplementation of phase 2 auctions had negative results.Investors need to feel secure before they will establish astrong manufacturing or developer base.
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