On 23 May 2025, the European Commission adopted several pieces of secondary legislation under the Net-Zero Industry Act (“NZIA”), including an Implementing Regulation on Non-Price Criteria in Renewable Energy Auctions (“Implementing Act”). The Implementing Act gives legal effect to Article 26 NZIA, which obliges each Member State to apply, from 30 December 2025, non-price criteria to either at least 30% of their annual auctioned capacity or, alternatively, to at least six gigawatts annually.

Background: Article 26 of the NZIA

The NZIA aims to anchor a secure and diversified industrial base for net-zero technologies (“NZTs”)—batteries, solar panels, wind turbines, electrolyzers, and heat pumps. It does so by combining shorter permitting processes, public procurement requirements fostering the EU’s resilience, easier access to finance, and regulatory sandboxes (see our blog post on the NZIA).

Member States must ensure that, as of 30 December 2025, a minimum share of their annual renewable-energy auction volume (30% or at least six gigawatts) incorporates the Implementing Act’s non-price criteria.

Within that tranche of their auctions, based on the Implementing Act, Member States are legally bound to introduce two discrete layers of requirements:

• First, bidders must clear pass-or-fail pre-qualification tests covering (i) responsible business conduct consistent with the Corporate Sustainability Due-Diligence Directive (“CSDDD”), (ii) compliance with the organizational and technical measures laid down in the NIS 2 Directive, and (iii) demonstrable financial and technical capacity to complete the project by the contractual long-stop date.

• Second, authorities must either verify and/or score each offer’s “sustainability and resilience contribution,” a concept that captures supply-chain diversification and quantifiable environmental performance.

Pass-or-Fail Pre-qualification Criteria

Every bid within the covered auction tranche must clear three pass-or-fail filters before being evaluated:

Responsible business conduct: Companies above SME size (as defined under Directive 2013/34/EU) and energy communities above 10 MW must publish a concise due-diligence statement covering the core due diligence elements set out in CSDDD and communicate them in the format required by the European Sustainability Reporting Standards (“ESRS”) of the Corporate Sustainability Reporting Directive (“CSRD”). SMEs and energy communities below 10 MW may be exempted.

Cyber and data security: Bidders must implement the organizational and technical measures listed in Article 21 of the NIS 2 Directive and submit a cyber-security plan as part of their bid. Where the bidder—or any critical ICT supplier—is headquartered in a jurisdiction that obliges companies to share vulnerability data with its authorities or has been linked to State-sponsored cyber-operations, the plan must place all operational data and control functions inside the European Economic Area.

Ability to deliver on time: Applicants must provide evidence of financial capacity, current permitting status, a detailed construction timetable and, for larger projects, a track record of on-time delivery. The Implementing Act also instructs auctioneers to modulate these requests so that they do not exclude smaller or first-time developers.

Resilience and Sustainability Contribution

Within the portion of annually auctioned capacity that must comprise non-price criteria, Member States are required to verify the sustainability contribution of bids and, where certain supply-chain thresholds are reached, also their resilience contribution. Either contribution can be verified in national auctions through a pass-or-fail condition, a weighted award criterion, or a combination of the two. This section explains when and how each contribution must be assessed.   

The resilience contribution must be assessed when the Commission finds that a single non-EU country supplies more than 50% of the EU’s annual demand for a given net-zero technology, or that supply of NZT final products from a single third country has increased by at least 10 percentage points on average for two consecutive years and reaches at least 40 % of the supply within the Union, (“listed country”) . In such a case,  the auction rules must favor bids that source the NZT and its main specific components from other countries (see the list here). Bids must source both the finished product and a minimum number of its main components from a country that is not the listed country. This minimum number varies by sector. For example, for offshore wind, the offshore wind turbine may not originate from the listed country and no more than four main components (e.g. nacelles, rotor hubs, blades) may come from the listed country. In any event, direct drive drivetrains (including the generator) and/or gearbox drivetrains (including the generator) may not originate in that third country.

In addition, if the EU’s reliance on any single main component from a third country exceeds 85%, the quantity of that component originating in that third country may not exceed 85 %. For example, if over 85% of all nacelles sold in the EU come from the listed country, an offshore wind bid could source no more than 85% of its nacelles from that country — the rest would have to come from elsewhere.

Environmental sustainability is assessed through at least one of eight optional criteria, each targeting a different aspect of a project’s environmental impact. Member States may select and weight the criteria that best align with national priorities, provided the process remains objective and non-discriminatory. The eight criteria are: (i) life-cycle carbon footprint, (ii) circular-economy factors such as recyclability and reparability, (iii) biodiversity protection, (iv) energy efficiency, (v) water use, (vi) pollution avoidance, (vii) innovation, or (viii) energy-system integration. The innovation criterion allows auctioneers to reward measurable advances beyond the state of the art, for example, the coupling of generation with battery storage or green-hydrogen production.

Expected Impact

Because Article 26 NZIA and the Implementing Act apply from 30 December 2025, the first NZIA-compliant auctions are expected to open in 2026. Developers therefore have until then to ensure their bids can satisfy the mandatory pre‑qualification screens and the resilience‑and‑sustainability criteria that every Member State must apply to a portion of their annual auctioned capacity (30% or, alternatively, at least six gigawatts annually).

In practical terms, although these pre‑qualification screens and the resilience‑and‑sustainability criteria are mandatory only for a portion of a Member State’s annual auctioned capacity, this Implementing Act will incentivize many bidders (and their suppliers) to adopt measures that respond to the criteria and thereby improve their chances of winning at auction.