Studio Auction

The public auctioning of supply contracts for new generation capacity is emerging as an effective way to ensure security of supply in developing countries. Brazil is the leading example of this type of competitive tendering: since late 2004, discos have awarded US$ 60 billion in contracts to 35 thousand MW of generation capacity. Other countries adopting or considering contract auctions include Chile, Peru, Ecuador and Turkey. These contract auctions pose complex challenges for discos, investors and regulators. Discos have the responsibility of forecasting their required load some years in advance, in countries where load growth is highly uncertain. Investors want to optimize their bids in order to maximize their revenues. And regulators wish to prevent any inappropriate strategic behavior by investors during the auction.

In Brazil OptHedge have been used by 15 discos, corresponding to about half of the country’s load; and by 20 investors, accounting for 70% of the energy contracted.

Tela 1.5