Tech solutions address challenges in infrastructure procurement

Image courtesy Greenmap

Policy approach(es) used to catalyse investment: A change in procurement policy

Commercial approach(es.) used to catalyse investment: Integration into project preparation process

Technology approach(es) used to catalyse investment: Implementation of a data platform or digital twin for greater transparency over performance

Finance approach(es) used to catalyse investment:  Public procurement; de-risking mechanisms or blended finance

AreA is a platform designed to change the way renewable energy is procured in developing countries, created by Greenmap, a non-profit organisation aimed at scaling up cheaper and faster renewable energy deployment in emerging economies. AreA offers a novel online solution for the entire Renewable Energy Procurement Programs (REPP) tender process, which is encrypted and stored by blockchain, and allows for a subsequent authentication of every single transaction, providing auditable timestamps of the relevant documentation.

AreA integrates data from different external sources through an automated process and interprets it by applying Natural Language Processing (NLP) and Neural Networks (NN). AreA introduces an Agent-Based Model (ABM) for price forecasting. The ABM is capable of dealing with the heterogeneous bidders that can be found in real renewable energy (RE) auctions.

Image courtesy Greenmap

AreA has an Audit Centre, which allows users and host governments to manage project tasks. All official communications take place in a distributed ledger. This is an auditable facility, providing greater transparency and setting a precedent in procurement. This approach to procurement design could be easily adapted to other infrastructure procurement needs.

Challenges experienced/overcome in implementation

One of the foremost challenges implementing AreA is to get reliable datasets concerning every target country. This is particularly challenging when dealing with developing countries, since a significant amount of data are often missing. To minimise this effect, AreA works in sync with several well-known databases and introduces proxy estimators, which are carefully calibrated to deal with missing data. 

Another important issue is the analysis of the stakeholders’ opinions, especially their perceived risks, which may be higher in developing countries. Confidence in the use of the platform is another critical issue. Stakeholder trust in the platform is promoted by implementing it on a blockchain.

Image courtesy Greenmap

Another big challenge is accurate price forecasting. Though critical to evaluate the tender success, the intrinsic complexity of auctions makes it difficult. Moreover, the heterogeneity (in terms of size and cost) and large number of participants impede the direct application of classical theoretical results. This issue is dealt with by an in-depth analysis of the participants, an original Levelized Cost of Electricity Model coupled to a stochastic Monte Carlo Simulation to provide uncertainty over the risks and cost of capital estimations, and by a novel approach for price estimations inside the ABM.

Note: This case study and all information within was submitted by Greenmap in response to our global call for InfraTech case studies.