Thunderstruck: participant behaviour and auction outcome

The move to I-SEM was ultimately intended to create a level playing field for all market participants to result in more competition. Nothing drives competition quite like a constrained auction and, for many developers, the Renewable Energy Support Scheme (RESS) Auction in 2019 (hopefully!) and thereafter will be their first experience of competitive renewable procurement.  

The RESS auctions will provide a great opportunity for project developers to secure funding for their projects. But they also create a new environment for developers. They create binary outcomes that the traditional iterative development model under administered subsidies did not possess – the risk was around grid, planning and development, not competing for limited subsidy.  

Participant behaviour is always discussed prior to auctions. as market participants seek validation from, and insight into, what others are doing. The things to remember regarding auctions though are understanding the project, understanding the price that will drive your desired return, understanding your walk-away position, and that outturn price can surprise on the downside.

This week’s blog looks at the importance of an evolved bidding strategy in the RESS auctions.

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