IEEE Power & Energy Society General Meeting - IEEE PES GM 2009, Calgary (Canada). 26-30 July 2009
Summary:
The adequacy problem in electricity market is becoming a very important issue as there is neither theoretical proof nor practical evidence of correct delivering of sufficient and timely generation capacity when it is needed in a real (imperfect) environment. In contrast, classical market design seems to fail when facing high demand growth and/or large hydro share as seen in several Latin American countries such as Chile, Brazil, Colombia and Peru among others. Currently, various mechanisms have arisen across this region with the intention of stimulating energy procurement and new investment. These are mainly based on long-term contract and options obligations, which are allocated through auctions. Auction theory then becomes very important to ensure optimal allocation and efficient prices for both the new generation and the end user. However, difficulties arise when applying pure auction theory because basic hypotheses are not met by most electricity markets. The objective of this paper is to address and discuss the Latin American experience with auction design for long-term contracts focusing on practical design and theory. The different mechanisms and auctions for ensuring supply adequacy are listed along with theoretical justification as part of the potential solution for the adequacy problem that different economies have proposed.
Keywords: Power system economics, auction design, power system planning, call options, firm energy, firm capacity.
DOI: 
https://doi.org/10.1109/PES.2009.5275658
Published in IEEE PES GM 2009, pp: 1-8, ISBN: 978-1-4244-4241-6
Publication date: 2009-07-26.
Citation:
R. Moreno, B. Bezerra, L.A. Barroso, S. Mocarquer, H. Rudnick, Auctioning adequacy in south america through long-term contracts and options: from classic pay-as-bid to multi-item dynamic auctions, IEEE Power & Energy Society General Meeting - IEEE PES GM 2009, Calgary (Canada). 26-30 July 2009. In: IEEE PES GM 2009: Conference proceedings, ISBN: 978-1-4244-4241-6
