Remarks by Associate Administrator Eric G. Postel at COP-22 Clean Energy Auction Side Event

Wednesday, November 16, 2016

Good Morning Everyone!

Welcome to our Clean Energy Auction Side Event! Today, you will hear from distinguished panelists, who will share their experiences holding renewable energy auctions and you will also get a chance to participate in the World Bank’s Pilot Auction.  So I hope you are as excited as I am about today’s program!

Before we get started, I’d like to make a few comments to kick-off our conversation.  And let me say this at the very top: today, we are straddling between the energy market as it is now and the energy market as we want it to be.

And the ramifications of whether we ramp up our investments in clear energy today, or we don’t, could mean the difference between making the right choices on energy policy or paying the consequences of climate change down the road. Simply put: if we invest now, we will straddle the line between the past and the future.

So, the question before us is: How do we straddle that line? For many countries, reverse auctions have become an essential policy instrument to promote the transition to renewable energy sources and technologies.

These auctions have emerged as an important tool for countries to attract competition, mobilize private investment, and drive down cost. Nations large and small, developed and developing are using renewable energy auctions to rapidly scale clean energy at low prices.  And by doing so, they are contributing to both their climate change and economic development goals.

We’ve seen it in Mexico, where the country’s second renewable energy auction held in September exceeded everyone’s expectations: companies won rights to produce almost 3,000MW of power and generate about $4 billion of investment.  USAID proudly partnered with Mexico’s Energy Secretary (SENER) and Energy Regulatory Commission (CRE), among others, to develop the rules, timeline and electronic platforms of Mexico’s first and second renewable energy auctions and also helped Mexico process hundreds of offers from companies prior to pre-qualification.  And, Mexico is just one country on a long list of countries that have benefited from renewable energy auctions.

In Zambia, the International Finance Corporation’s auction this past May resulted in the lowest provisional prices received for solar in Africa to date – ranging between 6 and 8 cents per kilowatt hour for 100 MW of solar projects – partially thanks to some external support which helped keep these rates low. And because we believe the potential of renewable energy auctions is real, we proudly supported the IFC’s Scaling Solar Program in Zambia and we have committed $4 million in funding for future auctions in Senegal, Madagascar, and Ethiopia to cover activities such as technical studies and environmental studies, among many others.

The fact of the matter is that renewable energy auctions have the potential to revolutionize the way we invest in energy. Countries around the world – from Mexico to Zambia; and from Afghanistan to El Salvador – are successfully transitioning to renewable energy sources and technologies. And they are better off for it.

The success stories of these countries are important, because success creates a momentum, and we have that momentum now.  No country, no matter how small, can afford to sit on the sidelines of progress – now is the time to scale clean energy at low price and build success upon success.

Today, you will have the chance to see for yourselves the concepts, mechanics, and efficiencies of auctions. Two members of the World Bank’s Pilot Auction Facility (PAF) have joined us to walk us through the model they have developed.  The PAF is using auctions to stimulate investment in projects that reduce greenhouse gas emissions, maximize the impact of public funds and leverage private sector financing.  And to this date, they have hosted two successful auctions, allocating over 40 million dollars in climate funds to reduce the equivalent of over 14 million tons of carbon dioxide.

So before I turn it back to Scott to lead this discussion forward, let me just say this: the energy market as we want it to be is in the offing. And, if we work together and use the right tools, we can straddle the line between the past and the future.

Thank you.

U.S. Center, Marrakech, Morocco