The Enduring Auction Capability (EAC) delivered its first set of real results for delivery on Friday November 3rd 2023. The new platform brings some major changes in how frequency response is procured.
With participants now able to bid into and deliver multiple frequency response services simultaneously, split across the services and submit negative bids, just how much of an impact did this make on the outcomes of the auction?
Prices turn negative in the first results using the new EAC
The results from the first auction saw negative prices in frequency response services for the first time. Prices in Dynamic Regulation High fell negative in EFA blocks 3 to 6, while prices in Dynamic Moderation High fell negative in blocks 5 and 6.
Aside from Dynamic Regulation Low, the results saw clearing prices in all frequency response services fall - including those turning negative. The introduction of overholding and co-optimisation was expected to make the procurement of frequency response services more efficient, with lower prices.
Meanwhile, cleared volumes remained relatively stable. Dynamic Containment saw falls in the volumes of both High and Low services procured. This was a result of lowered requirements for the service in the auction.
How did bidding go?
The Enduring Auction Capability introduced a host of new bidding functionality. Get up to speed by reading our explainer here.
A total of 1,345 baskets (essentially, separate bids) were submitted in this auction, an average of 224 per EFA block. 23 participants submitted these bids for a total of 109 units. This means every frequency response provider moved across to the new auction platform for day 1.
27% of baskets contained bids for a combination of Dynamic Containment, Dynamic Moderation and Dynamic Regulation, utilizing the new splitting functionality within the EAC. Ten different units received contracts which resulted in the simultaneous delivery of different frequency response services.
Meanwhile, participants also placed their bids for multiple services across multiple baskets, making use of the auction’s co-optimization functionality. 67% of baskets within the same EFA block were for the same unit but for different services, providing different options for the auction algorithm to select from.
In addition to splitting, some participants used the enhanced bidding functionality by using child and/or substitutable child bids. 67% of baskets made use of child bids, while 5% made use of substitutable child bids. Subsitutable child bids are a new feature from the EAC.
Finally, 9% of baskets were “looped”, meaning these are connected within the auctions clearing algorithm.
Impacts on revenues remain to be seen
Whilst the first auction saw a fall in frequency response prices, the impact on revenues remains to be seen. The flexibility introduced through the Enduring Auction Capability could provide some optimizers the ability to improve the revenues they generate. Those who get to grips with the new bidding functionality the quickest may well see positive impacts from the launch of the Enduring Auction Capability.