Maurer, Luiz T. A.Barroso, Luiz A.2012-03-192012-03-192011-07-25978-0-8213-8822-8https://hdl.handle.net/10986/2346This 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.CC BY 3.0 IGOAGGREGATE DEMANDARBITRAGEAUCTIONAUCTION DESIGNAUCTION DESIGNSAUCTION MECHANISMAUCTION MECHANISMSAUCTION PRICEAUCTION SYSTEMAUCTIONSAVERAGE PRICEBANDWIDTHBARRIERS TO ENTRYBEST PRACTICESBID PRICEBIDDINGBIDDING PROCESSBIDSBUDGET CONSTRAINTSBUSINESS MODELBUSINESS MODELSBUSINESSESBUYERBUYERSCALL OPTIONSCAPACITY EXPANSIONCAPACITY PAYMENTSCAPTIVE CUSTOMERSCAPTIVE MARKETCLIENT COUNTRIESCOMMODITYCOMMON DENOMINATORSCOMPETITION IN ELECTRICITYCOMPETITIVE AUCTIONCOMPETITIVE AUCTIONSCOMPETITIVE BIDCOMPETITIVE BIDDINGCOMPETITIVE PRICECOMPETITIVE PROCUREMENTCOMPETITIVENESSCOMPLEX INSTRUMENTSCONCESSIONCONCESSIONSCONTINGENT LIABILITIESCONTRACTUAL TERMSCOPYRIGHTCOPYRIGHT CLEARANCECOPYRIGHT CLEARANCE CENTERCOST STRUCTURESDECENTRALIZATIONDEMAND CURVEDEMAND FUNCTIONDEMAND GROWTHDEREGULATIONDEVELOPING COUNTRIESDISSEMINATION OF INFORMATIONDISTRIBUTION BUSINESSESDISTRIBUTION COMPANIESDIVESTITUREDUTCH AUCTIONDUTCH AUCTIONSE-MAILECONOMIES OF SCALEELECTRIC SECTORELECTRICITYELECTRICITY GENERATIONELECTRICITY INDUSTRYELECTRICITY MARKETELECTRICITY SECTORELECTRICITY SUPPLYEND-USEREND-USERSENERGY AUCTIONSENERGY PRICEENERGY PROCUREMENTENFORCEMENT OF CONTRACTSEXCESS SUPPLYEXPANSION OF GENERATION CAPACITYEXPOSUREFAIRFORWARD CONTRACTFUTURE CONTRACTSGENERATIONGENERATION CAPACITYGENERATION EXPANSIONGENERATORSGOVERNMENT CONTRACTSGOVERNMENT GUARANTEESGOVERNMENT INVESTMENTSGOVERNMENT POLICYGOVERNMENT SUPPORTGROWTH RATESIMAGESINCOMEINDEPENDENT POWER PRODUCERSINDIVIDUAL MARKETINDIVIDUAL MARKETSINFORMATION DISCLOSUREINFORMATION TECHNOLOGYINSTALLATIONINSTITUTIONAL FRAMEWORKSINSTRUMENTINTERNATIONAL BANKJURISDICTIONSLACK OF TRANSPARENCYLEVELS OF COMPETITIONLIBERALIZATIONLICENSESLIMITED ACCESSLIQUID MARKETSLOAD CURVELOAD SHAPELOWER PRICESMARGINAL COSTMARKET CONCENTRATIONMARKET DESIGNMARKET FORCESMARKET MECHANISMMARKET MECHANISMSMARKET PARTICIPANTSMARKET POWERMARKET REQUIREMENTSMARKET VALUEMARKETPLACEMATERIALMIDDLE-INCOME COUNTRIESMOBILE SERVICESNEW PRODUCTSOFFER PRICEOPEN AUCTIONOPPORTUNITY COSTSOUTSOURCINGPAYMENT GUARANTEESPHYSICAL ASSETSPOLICY FORMULATIONPORTFOLIOPOTENTIAL INVESTORSPOWER CONTRACTSPOWER MARKETSPOWER PLANTSPOWER PURCHASEPOWER PURCHASE AGREEMENTSPOWER PURCHASE COSTSPOWER SECTORPOWER SECTOR REFORMPRICE AUCTIONPRICE BIDSPRICE COMPETITIONPRICE DECREASESPRICE DISCOVERYPRICE ELASTICITYPRICE INFORMATIONPRIVATE INFORMATIONPRIVATE SECTORPROCUREMENTPROCUREMENT PROCESSPROCUREMENT PROCESSESPURCHASINGQUERIESRADIORADIO SPECTRUMREGIONAL POWERREGULATORREGULATORSREGULATORY FRAMEWORKREGULATORY OVERSIGHTREGULATORY REQUIREMENTSRELIABILITYRENEWABLE ENERGYRESERVERESULTRESULTSRETAILREVERSE AUCTIONREVERSE AUCTIONSRISK AVERSIONRULE OF LAWSALESALESSAVINGSSITESSPOT ELECTRICITYSPREADSTATE UTILITIESSUBSTITUTESSUPPLIERSSUPPLY CHAINSUPPLY CONTRACTSSUPPLY CURVESUPPLY FUNCTIONSUSTAINABLE DEVELOPMENTTELECOMMUNICATIONSTELECOMMUNICATIONS COMPANIESTELEPHONETENDERSTIME FRAMESTRADINGTRANSACTIONTRANSACTION COSTSTRANSMISSIONTRANSMISSION ASSETSTRANSMISSION FACILITIESTRANSPARENCYTRANSPARENT PROCUREMENTTRANSPARENT PROCUREMENT PROCESSTRANSPARENT WAYUNIFORM PRICEUNIFORM PRICE AUCTIONUSESUTILITIESUTILITY COMPANIESVALUATIONSVERTICAL INTEGRATIONWEBWEB SITEWHOLESALE MARKETWHOLESALE MARKETSWINNING BIDDERSWorld Bank10.1596/978-0-8213-8822-8