The coal phase-out announcements by multiple countries in 2019–2021 have created a crucial momentum. The question now is how best to implement these phase-outs. There are several instruments available for their facilitation. Reverse auctions are one option, although not a universal solution applicable in all circumstances.
The German governing parties of the 20th legislative period (2021–2025) agreed to phase out coal “ideally by 2030”. A gradual phase-out of German lignite and hard coal is therefore planned and enshrined in law.
This analysis aims to answer the many questions we receive about the German coal exit auction process. It summarises the phase-out process for hard coal and small lignite power plants in Germany, beginning with a short historical overview. It then identifies the primary factors that make reverse auctions suitable in the German context. It also describes how the auction design interacts with adjacent regulations. Finally, the paper presents the auction results and lessons learned with the goal of being useful for an international audience.