A substantial part of revenues in the electricity sector are derived from open tenders. These include renewables auctions, capacity markets and coal closure auctions. We support asset developers and owners to develop their bidding strategy and forecast auction outcomes.
Opportunities
To facilitate the energy transition, governments around the world are auctioning contracts for new low carbon energy infrastructure. The need to phase out carbon intensive energy sources and replace them with low carbon and renewable sources has resulted in billions of dollars’ worth of contracts tendered every year.
Challenges
A successful auction outcome requires a bidding strategy that balances a high probability of winning against the risk of bidding too aggressively. The “winner’s curse” is a well-known phenomenon that bidders seek to avoid.
Expertise
Our Commissioned Projects team helps auction participants form their bidding strategy with competitor analysis and auction simulations. We use our database of market participants and our market forecasts of their revenues to estimate the likely bids of the competitors. Combined with lessons from game theory and previous auctions, we provide recommendations to help our clients achieve a successful auction outcome.
Key references
Over the past years, we have:
- Developed the bidding strategy for an independent CCGT portfolio in the UK capacity market auctions
- Provided capacity market auction forecasts to a range of clients before each capacity auction in the UK
- Supported an offshore wind developer with competitor analysis in the auction for offshore wind seabed leases in Scotland
Advisory Service
Speak to our experts
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