Ex-ante dynamic network tariffs for transmission cost recovery

Abstract

This paper proposes a novel tariff scheme and a new optimization framework in order to address the recovery of fixed investment costs in transmission network planning, particularly against rising demand elasticity. At the moment, ex-post network tariffs are utilized in addition to congestion revenues to fully recover network costs, which often leads to over/under fixed cost recovery, thus increasing the investment risk. Furthermore, in the case of agents with elastic market curves, ex-post tariffs can cause several inefficiencies, such as mistrustful bidding to exploit ex-post schemes, imperfect information in applied costs and cleared quantities, and negative surplus for marginal generators and consumers. These problems are exacerbated by the increasing price-elasticity of demand, caused for example by the diffusion of demand response technologies. To address these issues, we design a dynamic ex-ante tariff scheme that explicitly accounts for the effect of tariffs in the longterm network planning problem and in the underlying market clearing process. Using linearization techniques and a novel reformulation of the congestion rent, the long-term network planning problem is reformulated as a single mixed-integer linear problem which returns the combined optimal values of network expansion and associated tariffs, while accounting for price-elastic agents and lumpy investments. The advantages of the proposed approach in terms of cost recovery, market equilibrium and increased social welfare are discussed qualitatively and are validated in numerical case studies. y b τ d t,m,i,k it replaces the product b τ m,i d t,k y b τ g t,m,i,p it replaces the product b τ m,i g t,p

What Do Prosumer Marginal Utility Functions Look Like? Derivation and Analysis

“…A fee c t is charged for energy imports, which relates to fees, network tariffs and taxes. The difference between the selling and buying prices results in a considerable price gap [31], especially due to the aforementioned fees [32].…”

A novel ex-ante tariff scheme for cost recovery of transmission investments under elasticity of demand

“…Condition (12) imposes that the revenues collected by the central planner (i.e. congestion rent plus network charging payments from consumers and generators) are greater or equal than the total investment costs.…”

“…The resulting nonlinear optimization problem is then formulated as a MILP by applying complementarity relations and standard algebraic manipulations. A detailed description of the procedure can be found in [12].…”

“…This paper takes into account these additional elements by following the initial study of the authors [12] on a novel tariff scheme for investment cost recovery, termed ex-ante dynamic network tariffs. The analysis is extended to evaluate the performance of the mechanism in a context of increasing demand elasticity.…”

Nodal and fixed price coexistence in distribution networks with optimal investment planning and tariff design

“…network lines can be expanded only by discrete amount. Recently, reference [18] proposes a transmission investment planning problem, where the effect of network tariffs on consumer behaviours is accounted directly into the market clearing problem. Moreover, a fundamental problem in network investment is the recovery of the total investment costs, also termed revenue adequacy condition.…”