Governments around the world are increasingly moving away from traditional fixed financial support for green energy in favor of competitive market auctions, according to the authors of the newly released report. This shift helps lower the financial burden on national budgets while ensuring that the majority of new solar and wind projects are built using market-driven prices.
“Since 2010, about 20 governments have moved away from administratively set pricing schemes towards more market-based mechanisms as the cost of wind and solar projects has continued to decline.” The report further notes that “auctions and market-based support mechanisms are now expected to account for nearly 60% of gross capacity additions from 2025 to 2030, based on the current pipeline of projects.”
In the past, many governments encouraged green energy by promising to pay a set, guaranteed price for every unit of electricity produced. Today, as solar and wind technology has become much cheaper, officials are instead asking companies to compete against one another in auctions, where the business that offers to build a project for the lowest price wins the contract. This change means that the growth of clean energy no longer requires massive, open-ended spending from the government, as private companies are now willing to take on more of the financial risk.
The report “State of Energy Policy 2026” was published by the International Energy Agency in France in April 2026. It was prepared by the World Energy Outlook team under the direction of Laura Cozzi, the IEA’s Chief Energy Modeller.
