Capacity Auction

The Capacity Auction enables supply to be balanced against demand while achieving the optimal price per unit.
NovaFori team

Understanding Capacity Auction within a marketplace

The Capacity Auction model enables sellers to offer available resources and buyers to bid for the quantity or capacity they require, with the auction determining the allocation of resources based on bids and predefined rules, achieving the optimal price per unit.

The design of this model was guided by three key objectives:
  • Maximise total value gain across buyers and sellers
  • Simplify the decision processes faced by buyers
  • Enable buyers and sellers to reflect their degree of flexibility over the quantities they want allocated.

The process:

Step 1

Auction set up

The auctioneer or marketplace operator sets up the auction by defining the quantity of product available, the number and duration of bidding rounds and the bidding rules for the auction.  The matching engine may also be configured to optimise for price per unit (to yield the greatest profit), to maximise distribution among bidders (to encourage future participation), or to sell the most product (e.g. for products with a short shelf-life).

Step 2

Bidding process

Buyers submit bids indicating the quantity of capacity they’re willing to supply and the price they’re seeking for that capacity. The auction platform accepts bids starting from the lowest price and gradually works upwards until the total capacity needed by the grid is fulfilled or until the maximum price threshold is reached

Step 3

Price increase

Once bidding has concluded, a matching engine determines the final price per unit and distributes available supply among the successful bidders.

Step 4

Auction closure

After the auction, the platform confirms the quantity each bidder has been allocated and final price per unit.  The buyers pay for the quantity they have been allocated and the orders are fulfilled.  The auction platform or marketplace may provide additional services, such as invoicing, shipping and sales tax calculations, payment processing and arranging shipping.

Why you might choose a Capacity Auction for your marketplace?

The auction marketplace software and the capacity auction model work together to an efficient and competitive environment for buyers and sellers to conduct online auctions.

Reach broader audience

On demand auctions

Increase price transparency

Competitive environment

Clients where we have used a Capacity Auction

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A global marketplace and exchange for voluntary carbon credits to drive environmental impact at scale.

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