Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/338912 
Year of Publication: 
2026
Series/Report no.: 
DIW Discussion Papers No. 2153
Publisher: 
Deutsches Institut für Wirtschaftsforschung (DIW), Berlin
Abstract: 
The Net Zero Industry Act (NZIA) promotes non-price criteria in renewable auctions. It aims to unlock green willingness-to-pay and scale up manufacturing capacity for net-zero technologies in the European Union (EU). This paper builds a partial equilibrium model of the European solar module sector and investigates how renewable auction design impacts solar photo- voltaic (PV) manufacturing. First, a formal analysis evaluates the complementarities between the different non-price criteria. Most notably, we find that if local manufacturing development is aligned with climate goals, then non-price criteria in solar auctions do not necessarily increase costs to consumers. Then, a numerical simulation estimates solar module production in 2030 based on NZIA targets, considering various degrees of market integration within the EU. The results show that market fragmentation can inhibit economies of scale and thus increase solar PV manufacturing costs by €2 billion per year. The development of a common framework for the implementation of non-price criteria at the country level is a no-regret solution. Leveraging the common European market with an integrated policy approach represents the first-best strategy. Forming coalitions of willing Member States is a second-best strategy that can significantly reduce fragmentation costs.
Subjects: 
renewable auction
non-price criteria
market integration
photovoltaics
solar modules
JEL: 
L51
L52
L60
Q27
Q40
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.