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Multi-unit auctions in the procurement of electricity

Author(s): Trifunović Dejan | Ristić Bojan

Journal: Economic Annals
ISSN 0013-3264

Volume: 58;
Issue: 197;
Start page: 47;
Date: 2013;
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Keywords: electricity auctions | uniform-price auction | discriminatory auction | descending clock auction | hybrid auctions | sequential auctions | combinatorial auctions

This paper reviews some multi-unit auction mechanisms that are used in the procurement of electricity. In ordinary multi-unit auctions bidders compete to buy several units of the same object from the seller, while in procurement or reverse auctions suppliers of electricity compete to sell a certain number of units. Reverse electricity auctions are used in numerous countries and they create a competitive market for electricity, instead of state-owned monopolies providing electricity at administratively set prices. In this paper we will present the most commonly used multi-unit auction forms in electricity markets. Auctions for electricity from renewable energy sources deserve special attention, since these suppliers cannot compete with large-scale producers at the present state of technology.
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