FABIAN WIGAND, ASSOCIATE ASSOCIATE DIRECTOR

1. / ©2018 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED1
CONFERENCE AUCTION SUPPORT
SCHEME IN UKRAINE FOR
RENEWABLE ENERGY DEPLOYMENT
KIEV, 21.02.2019
FABIAN WIGAND
ASSOCIATE DIRECTOR,
NAVIGANT
BEST PRACTICES FOR THE
TRANSITION TOWARDS AUCTIONS
Part of

2. / ©2018 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED2
Consultancy services on auctions performed
Analysis of auction schemes
Navigant/Ecofys
>600 energy experts
>60 offices wordlwide
>20 years experience designing &
implementing competitive
procurement/auctions
Part of the EUH2020
research project on
renewables auctions
RECOMMENDATIONS BASED ON 20 YEARS OF EXPERIENCE IN
AUCTION ANALYSIS & DESIGN

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UNDERSTANDING THE TRANSITION TOWARDS AUCTIONS
Transition from feed-in tariffs to acutioned tariffs
• Increases volume control, increases price competition
• Increases new risks for bidders (pre-development costs and risk of sunk costs)
• Quickly reflects market price developments but require competition
• More difficult for some smaller bidders
Administratively-set feed-in tariff Auctioned tariff
• Government sets volume
• Market sets price
• Government sets price
• Market sets volume

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Policy goals
• Price competition
• Volume control
• Other goals such as grid & system integration, local value creation etc.
• Be aware of trade-offs
Market readiness
• Market size & concentration, competition with other renumeration (e.. feed.in tariffs)
• Risk & duration of project development phases, ease of permitting
• Available funding (domestic/international, debt/equity), preparedness, risk perception
Institutional readiness
• Depend on type of auction, implementation timeline, desire for scalability of the auction.
• Alignment of relevant ministries, grid operators, permitting authorities, energy regulator
• Trust, transparency, independence
• Use international best-practices but tailor auction to individual case
PREPARE FOR AUCTIONS: TAILOR THEM TO POLITICAL,
MARKET & INSTITUTIONAL READINESS OF THE COUNTRY

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THE AUCTION DESIGN PROCESS
5
Target
definition
Market &
regulatory
analysis
Auction
design
Imple-
mentation
Evaluation
Institutional set-up
General design
elements
Procurement
procedure
Conditions for
participation
Deadlines and
penalties
Policy goals Market size
Pre-developed
project
Market players
Technology cost
Project
development &
operation
Existing
regulations &
incentives
Drafting of
required
documents
Market building
Procurement
conduction
• RfQ
• RfP and
awarding of
bids
Contracting
Monitoring of
realization
Lessons learned
Adjustment of
procurement
design

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• Build capabilities: Working groups, trainings (bidder simulation also for auctioning
authority)
• Align on political goals, be aware of trade-offs
• Study the market, prepare bidders
THE AUCTION IMPLEMENTATION PROCESS REQUIRES
BUILDING OF CAPACITIES & ALIGNMENT OF GOALS
Formal
regulation
Participation
documents
RfQ/RfP
Bid
evaluation
Results
Auction
Auction platform
Schedule
Key parameters
Clarifications
Qualification
Ranking
Publication of
awards
Publication of
reasons for
exclusion
Timely contract
award and
signature
Provision for
legal disputs
Market
building
Pre-bid
conference
Market feedback
Auction
simulation
Auction conduction
Announce-
ment
Drafting of
required
documents
Contract-
ing
Example of auction process

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Understand bidders
• Risk for bidders:
– Bid risks with sunk costs
– Penalty risks if not realizing projects
– Revenue risks, such as
▪ Off-taker risk, i.e. curtailment or off-taker default
▪ Political risks, i.e. expropriation, contract breach, changes in law/tax
▪ Currency risk, i.e.. currency fluctuations & exchange controls
• Avoiding collusion
– Collusion more likely if small, concentrated market
– Limit collusion through simple auction design and no post-auction negotiations
Prepare bidders
• Sufficient preparation time
• Pre-bidder conferences
• Trainings & auction simulations
Address concerns:
• Receive bidder feedback on design
• Guarantees
• Pot. exempt some sizes/technologies from auction
CREATE FAVORABLE CONDITIONS FOR INVESTMENT THROUGH
UNDERSTANDING, PREPARING AND ADRESSING BIDDERS

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EXAMPLE OF DESIGN CONSIDERATIONS DESIGN ELEMENTS:
SELECTION OF PROJECT-SITE
Government-site auction Bidder-site auction
Bidder 1
Bidder 2
Bidder 3
Bidder 4
Auctioneer
Project site
Selected
& pre-
developed
Pre-development by the auctioneer might
include:
• Grid connection
• Land lease
• Environmental assessments
• Resource measurements
15
MW
30 MW
Auction volume
(e.g. 100 MW)
30 MW
25
MW
Bidder 1Bidder 2
Bidder 3
Bidder 4
Auctioneer
Project-site is selected by bidders
Bidders compete with their projects
Bidders pre-develop their projects, e.g:
• Defining site boundaries
• Measuring resource availability
• Procuring land lease

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Government-site auction
SELECTION OF PROJECT-SITE: COUNTRY EXAMPLES
Bidder-site auction
Bidder 1
Bidder 2
Bidder 3
Bidder 4
Auctioneer
Project site
Selected
& pre-
developed
15
MW
30 MW
Procured volume
(e.g. 100 MW)
30 MW
25
MW
Bidder 1Bidder 2
Bidder 3
Bidder 4
Auctioneer
Country examples:
• Denmark/Germany/Netherlands wind
offshore
• Dubai/Abu Dhabi (UAE)
• Morocco
Country examples:
• Germany PV & wind onshore
• South Africa (with easier project
development in Renewable Energy
Development Zones - REDZ)
• Mexico, Chile

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FABIAN WIGAND
Associate Director Energy
Phone: +49 (0) 30 29 77 35 79 –
23
Mobile: +49 (0) 172 5833 265
E-Mail:
fabian.wigand@navigant.com
CONTACTS