THE CARTEL

CASE DESCRIPTION

To provide a sustainable and safe future for all its citizens, the administration of Gotham city has decided to
move from nuclear power to solar power to meet all its energy requirements. The Commissioner of Energy
department has invited bids from potential developers to bid for 5000 MW (DC) of solar projects across three
locations namely Gotham Plaza Hotel, Gotham City Science Institute and Happy Acres. The projects in each of
these locations are categorized into small scale (5-25 MW (DC)) and large scale (26-100 MW (DC)) projects
depending on the capacity of the individual project. There is a cap on the maximum capacity available in each
location and also in each category i.e., only 1000 MW can be allotted for small projects in location Gotham
Plaza Hotel. Table A below gives the cap for each category of project at the respective location:

Small project Plant

Total capacity Large project
capacity Load
available capacity
Location available Factor
available (in
(PLF in
(in MW (DC)) MW (DC))
(in MW (DC)) %)

Gotham Plaza
1550 1000 550 19%
Hotel

Gotham City
1850 800 1050 20%
Science Institute

Happy Acres 1600 0 1600 22%

Table: A: Available Capacities

CONSTRAINS AND ASSUMPTIONS

1. Each bidder can bid for maximum of 5 projects

2. The maximum capacity that a bidder can bid for across both the categories put together is 100 MW
(DC)
3. Minimum capacity of each project: 5 MW (DC)
4. Maximum capacity of each project: 100 MW (DC)
5. Project capacities can only be in increments of 1 MW (DC)
6. Losses for smaller projects are 2.5% and losses for larger projects are 1% of gross generation
7. Maximum tariff cap for smaller projects: Rs 8.5000/ kwh
8. Maximum tariff cap for larger projects: Rs 7.0000/ kwh
9. Minimum tariff for both smaller and larger projects: Rs 4.0000/ kwh
10. Assume all costs including project cost/MW (DC) for all firms and for all project capacities are same
11. Make any other assumptions that you may deem necessary. Also, clearly mention the assumptions
made, if any, in the document

BID SUBMISSION

Each bidder (i.e., each team) has to submit the bid in the following format:

Project Bid Offered Capacity Quoted Tariff

(projects 2-5 are (In MW (DC), Determines whether the project will fall (in Rs/kwh upto 4 decimal
optional) under small/ large category) points)

Table B: Bid submission format

PROJECT ALLOCATION THROUGH REVERSE BIDDING MECHANISM

Bids received will be ranked in the ascending order of quoted tariff. The bidder with the lowest tariff will be
declared as ‘Successful Bidder for the Offered Capacity’ (in MW (DC)). In case of more than one bidder having
an equal tariff, then the bid corresponding to higher capacity would be given the preference. In case if both
tariff and capacity are same, the bid capacity will be split equally between the two bidders. The process will be
continued till the capacity for a particular project category in a particular location is reached. Post that, there
will be no allocation of projects to that particular project category in that particular location. Such allocation
will be repeated till capacities across all project categories in all locations are reached or till all possible bids are
allotted, whichever is earlier.

Also, in case the quoted bid capacity is higher than the available capacity in the particular category and
particular location, only the available capacity will be allotted i.e., say in location Gotham Plaza Hotel under
small category 990 MW has already been allocated to lower priced bidders, and say Bidder M with bid capacity
of 20 MW is next in the rank, bidder M will be allotted only 10 MW as that is the remaining available capacity.

GUIDELINES

1. The teams are required to submit a two page word document with details of their bid as per the format
given in Table B (mention if you have made any assumptions) and a brief write up on why they chose
the particular bid strategy. Also provide the excel sheet if you have done any scenario analysis/ game
theory analysis (optional and will be considered for additional credits). Use font size 11 Georgia
2. File name has to be <Team Name>_<School Name>_<Competition Name>_<Round>
3. Send your entries to TheCartel@isb.edu
4. Last day for Case Submission is 3rd September, 2016 11:59:59 PM

EVALUATION CRITERIA

1. Revenue generated in the first year which will be calculated as (Bid tariff)*(Units generated per
MW)*(Capacity won). The units generated will be calculated from the PLF post losses
2. Content and Analysis – In depth analysis supporting the chosen bid strategy