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Auctions are here

It’s on! The Clean Energy Regulator has announced the first ERF auction will occur on 15-16 April 2015. Importantly, if you want to play you need to register by 13 March 2015. Start your engines!

The announcement caps a year and a half in the making of the ERF (with the safeguard mechanism still to come). How will it go?

Anyone wanting to play, needs to act fast. You have to register for the auction at least 20 business days in advance (13 March 2015) to allow the Regulator to run their eye over your proposed bid – you can be excluded if the Regulator does not think you have the capacity to carry out the project. You will also have to think carefully about the risks of delivery of a forward contract (see our submission on the draft delivery contract). That means you have 4 weeks to pull everything together and think about your strategy.

I would not be so bold but the Regulator has given advice on strategy:

The best strategy for succeeding at auction is for you to price your project realistically by bidding the lowest price at which it is worthwhile undertaking the project.

What the Regulator hasn’t given is the ‘benchmark price’ to guide the market through the first auction. Regulator head, Chloe Munro, did not think participants had unrealistic expectations that need to be checked by announcing a benchmark price for the first auction. Instead, the Regulator will maintain a secret benchmark price – any bids over this price will automatically be ruled out.

There’s a lot to think about and it will be interesting to see how this new market evolves. There are only a couple of new methods under the new system so existing projects are certainly in a good position to put in bids.

For more info, check out our revamped and new ERF pages on what it means for Aboriginal carbon projects, auctions and how it happened.


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