Resilience auctions are coming to the European Union. In future, 30% of projects awarded in public tenders will have to meet resilience criteria. There will be no tariffs or other trade barriers for the time being. This was the provisional result of the trilogue negotiations between the EU Commission, Council and Parliament on the Net-Zero Industry Act. The act is intended to help manufacturers in energy-relevant industries, such as module production, to become more competitive and diversify the supply chain in the energy sector.
In response to the enormously high energy prices found across Europe in 2022, the Commission first presented its proposal for the Net-Zero Industry Act in 2023. It stated that in future, the European Union should not be dependent on one country for its energy supply, and it should build up its own production. Addressing the European Parliament on Feb. 5, EU finance commissioner Mairead McGuinness highlighted that 97% of the international community’s annually installed solar modules are sourced from non-EU countries – with the lion's share sourced from China. Price is the driving factor, with European manufacturers unable to compete with foreign competitors. The Council and Parliament opted to set new rules for public tenders in a bid to support market access for domestic manufacturers.
Market access for wind and solar
The European Council of Ministers and the European Parliament have been discussing the details of the Net-Zero Industry Act since March 2023. The two most hotly debated topics revolved around Article 20 market access and the definition of net-zero technologies in the Annex – nuclear energy.
The two EU institutions have now decided that every member state with a tender volume of more than 6 GW of renewable energy per year must select 30% of the tendered volumes according to resilience criteria.
The technology suppliers are to be assessed according to a responsible business code of conduct, as well as cyber and data security and delivery capability. Assessments will also be made of a supplier’s sustainability and resilience credentials. For example, only 50% of the modules in auctions in each member state may be imported from a single country per year. Production should also be more environmentally friendly than the minimum required by international standards. The use of particularly innovative technologies, or technologies that facilitate grid integration, should be rewarded by the criteria.
Each member state is free to decide how important each aspect of the criteria should be in its market. For example, environmental protection in production may be rated higher than innovation or grid usefulness, or vice versa.
In practice, there will then most likely be an auction with “non-resilient” modules and one with “resilient” modules.
Date of introduction
There was controversy over when the new regulations should come into force. The council's previous proposal from December 2023 made no distinction between wind and solar. The criteria were to apply to both forms of energy generation from nine months after the Net-Zero Industry Act was enacted.
This was met by criticism form the solar industry, as European manufacturers in the wind sector are already capable of meeting the continent's demand – in stark contrast to PV manufacturing.
The exact wording of the final agreement was not yet available at the time of publication, so it is not yet clear whether the council and Parliament have made a distinction between when regulations should apply to wind power and photovoltaics.
Nuclear energy served as another bone of contention. While nuclear energy is not listed as a net-zero technology in the Commission's proposal, it is included in the Council of Ministers' proposal from December 2023. In the current version, nuclear energy is listed as a net-zero technology in the legal act. The next step is for the Council and Parliament to formally adopt the provisional outcome of the negotiations.
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