The single-buyer model (SBM) is a widely adopted electricity market architecture in developing economies. As the share of variable renewable energy (VRE) increases in the power supply, SBMs’ competitively tendered, long-term, fixed-price power purchase agreements (PPAs) create a challenge: while competitive price-only auctions reveal generators’ costs, they do not reveal the system value of VREs, which is crucial for efficient operation and investment decisions in high-VRE systems.
