The evolution of electricity auctions in South America

Abstract

Regulatory reforms of the power sectors in South America have always been driven by the need of attracting enough investment to guarantee an expansion rate capable of covering the fast-paced demand growth in the continent. In order to achieve this objective, in the last decade several countries in the region have reshaped their regulatory frameworks in the direction of long-term auctioning. This paper first provides a detailed description of the regulatory evolution that resulted in the implementation of auction schemes and then it presents an updated review of the mechanisms implemented in five South American countries, comparing their main design elements.

Regulatory reforms of the power sectors in South America have always been driven by the need of attracting enough investment to guarantee an expansion rate capable of covering the fast-paced demand growth in the continent. In order to achieve this objective, in the last decade several countries in the region have reshaped their regulatory frameworks in the direction of long-term auctioning. This paper first provides a detailed description of the regulatory evolution that resulted in the implementation of auction schemes and then it presents an updated review of the mechanisms implemented in five South American countries, comparing their main design elements.