Electricity Auctions

Luiz Maurer

Description

Virtually every country in the world faces the challenge of designing the regulatory and financial mechanisms that ensure cost-effective procurement of generation to supply electricity demand. Historically, procurement of generation has been particularly difficult in the emerging economies of Asia, Latin America and Africa. High and usually volatile load growth rates, limited access to financing and immature electricity markets have presented obstacles that have introduced challenges to the procurement process. More recently, environmental concerns regarding land use, impact on biodiversity, indigenous populations, and greenhouse gasses emissions have added layers of complexity.
Over the last 7 years, auctions for long-term electricity contracts have been getting increased attention within the electricity sector community as thet have emerged as a successful mechanism to procure new generation capacity. Among the reasons for such widespread interest is the large amount of capacity that has been already contracted from diverse technologies (conventional generation, large hydroelectric plants, renewable), under a variety of innovative auction arrangements and mechanisms, sometimes with multiple buyers and sellers taking part in the process. Auctions have been attracting a broad range of investors, from large established companies to new local and foreign independent power producers, and first-time power system investors.
This book presents a comprehensive overview of the international experience in electricity auctions, focusing on the procurement of long-term electricity contracts to foster new generation capacity. To this end, several relevant case studies were selected. While focus is given to emerging countries, insightful experiences from developed markets are reported as well. The book reveals the subtlety and complexity of trading and contracting for firm generation in the current power industry and the multiplicity of formats that the corresponding regulatory instruments may adopt. Lessons learned - both positive and negative - regarding policy formulation and implementation which should be of interest to policy makers, government authorities, regulators and power sector stakeholders.

Sujets

• Aggregate demand
• Auction
• Competitiveness
• Demand curve
• Market concentration
• Market Forces
• Marketplace
• Supply chain
• Supply and demand
• Energy
• Industry

Informations

• Publié par: world-bank-publications
• Publié le: 25 juillet 2011
• Nombre de lectures: 28
• EAN13: 9780821388242
• Langue: English
• Poids de l'ouvrage: 2 Mo

Extrait

A WORLD BANK STUDY
Electricity Auctions
AN OVERVIEW OF EFFICIENT PRACTICES
Luiz T. A. Maurer
Luiz A. BarrosoWORLD BANK STUDY
Electricity Auctions:
An Overview of
Effi cient Practices
Luiz T. A. Maurer
Luiz A. Barroso
With support from: Jennifer M. Chang, Philippe Benoit, Daryl Fields,
Bruno Flach, Matias Herrera-Dappe, and Mario Pereira© 2011 The International Bank for Reconstruction and Development/The World Bank
1818 H Street NW
Washington DC 20433
Telephone: [phone]
Internet: www.worldbank.org
All rights reserved
1 2 3 4  14 13 12 11
World Bank Studies are published to communicate the results of the Bank’s work to the development
community with the least possible delay. The manuscript of this paper therefore has not been prepared
in accordance with the procedures appropriate to formally-edited texts. This volume is a product of the
staff of the International Bank for Reconstruction and Development/The World Bank. The fi ndings, inter-
pretations, and conclusions expressed in this volume do not necessarily refl ect the views of the Executive
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ISBN: 978-0-8213-8822-8
eISBN: 978-0-8213-8824-2
DOI: 10.1596/978-0-8213-8822-8
Library of Congress Cataloging-in-Publication Data
Maurer, Luiz.
  Electricity auctions : an overview of effi cient practices / Luiz T. A. Maurer, Luiz A. Barroso; with support
from: Jennifer M. Chang .  .  . [et al.].
    p. cm.
  Includes bibliographical references.
  ISBN 978-0-8213-8822-8—ISBN 978-0-8213-8824-2
1.  Electric utilities. 2. Commodity exchanges. 3. Auctions. I. Barroso, Luiz A. II. Chang, Jennifer M. III.
Title.
  HG6047.E43M38 2011
  333.793′23—dc23
2011019447
4Table of Contents
FOREWORD ............................................................................................................................. vii
ACKNOWLEDGEMENTS ........................................................................................................ ix
EXECUTIVE SUMMARY ..........................................................................................................xi
1 Introduction .......................................................................................................................... 1
Objectives of this Report ..................................................................................................... 1
Approach .............................................................................................................................. 1
Who Should Read This Report? ........................................................................................ 2
Report Organization ........................................................................................................... 2
2 Auctions—Basic Concepts ..................................................................................................4
What is an Auction?.............................................................................................................4
Why Auctions? ..................................................................................................................... 5
Emergence of Auctions in the Power Sector: Historical Overview .............................. 5
Auction Design ..................................................................................................................... 7
Summary of Auction Designs .......................................................................................... 19
Outcomes of Well-designed Auctions ............................................................................ 20
From Theory to Practice ................................................................................................... 20
Auctions and World Bank Procurement Guidelines .................................................... 20
When Not to Use Auctions? ............................................................................................. 21
If Not Auctions—What are the Alternative Procurement Mechanisms? .................. 23
Negotiations ....................................................................................................................... 23
3 Electricity Auctions: Experiences in Di ff erent Jurisdictions ........................................27
Introduction ........................................................................................................................ 27
Classifying Country Experiences .................................................................................... 27
4 Auctions in Latin America ................................................................................................ 31
Brazil .................................................................................................................................... 31
Colombia ............................................................................................................................. 36
Chile ..................................................................................................................................... 44
Peru ...................................................................................................................................... 48
Panama ................................................................................................................................ 53
Central America ................................................................................................................. 54
Mexico ................................................................................................................................. 56
iiiiv World Bank Study
5 Auctions in Asia, Oceania, Europe, North America, and Multi-Country ................. 59
Asia and Oceania ...............................................................................................................59
Vietnam ............................................................................................................................... 59
Philippines .......................................................................................................................... 60
Thailand .............................................................................................................................. 61
South Australia ................................................................................................................... 61
Europe ................................................................................................................................. 62
North America ................................................................................................................... 65
Multi-country Auctions .................................................................................................... 73
6 Auctions and Renewable Energy Sources ...................................................................... 77
Overview: An Increasing Role for Renewables ............................................................. 77
Feed-in-Tariff s and Other Mechanisms to Support Renewables ................................ 78
Renewable Energy Auctions ............................................................................................ 80
Site and Technology-specifi c Auctions ...........................................................................89
7 Main Lessons ...................................................................................................................... 95
Auction-related Procurement and Energy Policy Aspects .......................................... 95
Market Context .................................................................................................................. 96
Foundations for a Successful Auction ............................................................................ 97
General Auction Design Issues .....................................................................................