The Effect of Interconnections on Economic Generation Expansion Patterns

Power system interconnection in developing countries and the equilibration of marginal costs

“…Until recently only industrialized countries have enjoyed the benefits of interconnection. This is all the more unfortunate in that the benefits of interconnection are relatively greater in small and medium size grids (Cassaza and Hoffman, 1968;Kirchmayer et al, 1957). These are characteristic of developing countries.…”

“…One is the saving in reserve margin, the second is the opportunity to equilibrate marginal costs. The benefits of reduced reserve margins are well known and amply documented (Calabresse, 1947;Cassaza and Hoffman, 1968;Cook et al, 1962;Kirchmayer et al, 1957;Olwegard, 1970;Pang and Wood, 1975;Vassell and Tiberts, 1972). Benefits also arise from the opportunity to generate preferentially from the power system which has, at the time, the lowest marginal cost.…”