How to make renewables auctions resilient to supply chain shocks

A new report from the International Renewable Energy Agency (IRENA) looks at how countries can protect large-scale renewable energy projects, like solar and wind farms, from supply chain disruptions such as the recent Strait of Hormuz crisis. These disruptions have driven up costs, delayed projects, and made it harder for governments to get bids on renewable energy contracts through auctions, the process many countries use to award contracts for new power projects.

The report suggests governments can design these auctions to hold up better under stress. One key tool is "indexation," which adjusts payments to project developers to account for inflation or unexpected cost spikes, spreading that risk among developers, utilities, and consumers in a clearer way. Other measures include giving projects more time to get built, adjusting financial penalties for delays, and requiring some local sourcing of materials, though IRENA cautions that strict local-content rules can backfire in smaller or less-developed markets. Large, stable markets like China, India, and Turkey are seen as best positioned to benefit from requiring local sourcing.

None of this points to a specific action for homeowners. It is policy-level guidance aimed at the governments and agencies that run renewable energy auctions, not at household energy upgrades or rebates. But it matters for the bigger picture: how affordably and quickly countries can keep building the wind, solar, and grid infrastructure that shapes electricity prices and availability over time. IRENA argues that well-designed auctions, paired with broader trade, industrial, and recycling policies, can make the shift to renewable energy more resilient to future shocks.