Market concentration and energy auction

Regulation & Policy    Jul 9, 2019 5:19 PM

The government launched a tender for renewable energies in February this year, and wants to try again in August, hoping for better results. This is what authorities need to know to succeed.

According to Portafolio, a technical concept by the Sumatoria and Pe3 consulting firms said that the auction that for Unconventional Renewable Energy Sources (Fncer) in the generation matrix, must “define a target demand.”

Unless authorities go this route, the source said, the process would fail again, as it happened in February, since without a defined demand, the auction would end up saturating the energy generation market.

“It is necessary to carry out an in-depth analysis of what is the amount (of energy demand) that is justified for the auction, and its implications on the national generation system and the market. This document needs to be submitted and discussed with the sector”, part of the document says.

The report adds that the analysis must take into account that the auction assigned 1,400MW to renewable energy .

“This capacity is considerably higher than the one originally planned for the first long-term auction for 2022 (1,000 MW), where there were no coal plants that will contribute to higher emissions, and eventually justify a greater need for Fncer,” the document highlights

Bottom-line: Looking at the bright side, although February’s auction did not give any results, it taught the government valuable lessons to be considered for future tenders.

Now it is entirely up to authorities to review their notes, take new ones, and “make things happen” in August.

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