• Policies can face tradeoffs between minimizing costs and creating local industries. • We explore how tradeoffs are managed in Mexico and South Africa's policy designs. • Distinct development logics led to different renewable energy auction designs. • Calibrations of policy instruments can be a key determinant of policy outcomes. • Well-calibrated local content requirements can help foster local industry. Green industrial policies around renewable energy (RE) are growing increasingly prevalent in emerging economy contexts as a means to foster low-carbon industrialization pathways. However, policymakers often face a tradeoff in their policy designs. In this paper, we focus on the tradeoff between minimizing the cost of low-carbon energy generation to fuel traditional input-intensive industrialization strategies, and implementing potentially costly measures to build local industries around low-carbon energy technologies. Specifically, we utilize the cases of Mexico and South Africa to investigate how each country’s distinct prioritization of these two objectives led to a divergence of their RE auction designs and outcomes. Specifically, using data on the involvement of local and foreign actors in Mexican and South African RE projects, policy documents, and interviews with public and private stakeholders in the two countries, we show how each country’s policy design shaped RE market and bid price developments, and the formation of local RE value chains. We find that the prioritization of low-cost RE generation can result in a greater reliance on existing foreign value chains and capital, without building the local capabilities that could result in greater long-term benefits for the market. We further discuss the implications of our results for policymakers, focusing on providing recommendations for RE industrial policy design in general, and the calibration of local content incentives in particular.