Oxford Energy Podcast – The Limit of Auctions

The deployment of auctions in electricity systems has been spreading rapidly in many countries across the world to the extent that it may be regarded as normal practice in some contexts – such as the procurement of new conventional generation capacity and renewable energy sources – and that further extensions into other areas – like network expansion – have been proposed. However, the widespread use of auctions of this sort is a relatively recent phenomenon and it raises a number of questions, such as these: Are auctions of this kind a useful market-based tool to complement other methods of resource development? Are they a type of second best – a symptom of the fact that electricity markets themselves are broken and can no longer give appropriate signals? And, have we reached ‘peak auction’? In this podcast Anupama Sen is in conversation with Malcolm Keay and David Robinson, Senior Research Fellows on the OIES Electricity Programme, to discuss these issues based on their recent paper: “The Limits of Auctions: reflections on the role of central purchaser auctions for long-term commitments in electricity systems”. ​