About the auction process
The auctions will take place no less than five days before the first day of the exercise period defined in the contract. IBM will provide and manage an IT application and platform for the auction that has been used successfully in the first six VPP auctions and elsewhere in Europe. The auction itself will be Internet based.
Auction methodology
The aim of the auction will be to determine the values of the Option Premium at which demand from bidders is less than or equal to the volumes on offer.
The auction will be carried out in several rounds. All products will be offered simultaneously. The relative prices of the different product durations will be defined by Indifference Curves – bidders will be free to switch demand between the two different product durations within the base-load and peak-load products. This will give bidders the opportunity to assemble a portfolio that is optimal for their circumstances, dependent on the convergence between offer and demand. Prices for the Option Premium will be announced, and bidders will enter the amount of MW they want to bid for subject to the constraint that a bidder can never increase the MW-semester (MWs) contained within his bids in response to increasing prices. In the following rounds, prices will be increased and bidders may only maintain or decrease the amounts of energy they bid for. The auction clears when a price level is reached (“Closing Price”) where demand no longer exceeds the supply of product. This so called “ascending clock auction” method and its exact procedures will be described in detail in the Auction Rules. Each participant’s bids will be subject to limits determined in the qualification process.
The Secretaría General de la Energía (SGE) may define, before the auction, a minimum price (“Reserve Price”) for each product according to the Auction Rules. These Reserve Price will be communicated to the Auction Manager before the auction but will not be made public. If the Closing Price of a product is lower than the Reserve Price, no capacity of that product will be sold.
Who can be a bidder in the auction?
Any legal person may seek to qualify to act as a bidder. There is no longer a requirement to be a member of the Spanish electricity market.
To be able to get more detailed information, interested parties will be asked to sign and send the Declaration of Non-Collusion and Confidentiality to MEFF.
After having submitted the signed Declaration of Non-Collusion and Confidentiality to MEFF, the party will become a Registered Party and will have access to the password protected part of this website which contains more detailed information about the auction. Following this, to become a Bidder, Registered Parties must sign a document stating that they accept the terms and conditions of the Master Agreement. The Master Agreement contains all the specifications of the products, the rules for qualification, the rules for settlement and margins and the auction rules. Prior to the auction a financial guarantee needs to be put in place to ensure bidders comply with their obligations and the level of the financial guarantee sets a limit for the maximum capacity in MW-semesters for which that bidder may submit bids. The guarantee submitted prior to the auction must be replaced by a payment guarantee in the case of successful bidders.
Questions
After registration in the website and having submitted a signed Declaration of Non-Collusion and Confidentiality, Registered Parties may use the Frequently Asked Questions section to submit questions to the Auction Manager relating to the auctions.