Maurer, Luiz T. A.; Barroso, Luiz A.
Description:
This report assesses the potential of
electricity contract auctions as a procurement option for
the World Bank's client countries. It focuses on the
role of auctions of electricity contracts designed to expand
and retain existing generation capacity. It is not meant to
be a 'how-to' manual. Rather, it highlights some
major issues and options that need to be taken into account
when a country considers moving towards competitive
electricity procurement through the introduction of
electricity auctions. Auctions have played an important role
in the effort to match supply and demand. Ever since the
1990s, the use of long-term contract auctions to procure new
generation capacity, notably from private sector suppliers,
has garnered increased affection from investors,
governments, and multilateral agencies in general, as a
means to achieve a competitive and transparent procurement
process while providing certainty of supply for the medium
to long term. However, the liberalization of electricity
markets and the move from single-buyer procurement models
increased the nature of the challenge facing system planners
in their efforts to ensure an adequate and secure supply of
electricity in the future at the best price. While auctions
as general propositions are a means to match supply with
demand in a cost-effective manner, they can also be and have
been used to meet a variety of goals.