Transmission investment and expansion planning in a restructured electricity market

Wu, F.F.; Zheng, Feng; Wen, Fushuan

doi:10.1016/j.energy.2005.03.001

Cited by 163 publications

(91 citation statements)

References 30 publications

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“…But this may be a mixed blessing; since expansion costs are nonlinear, incentives toward free riding can easily arise; Bushnell and Stoft [13]. The incentives to co-operate and undertake beneficial investments further depend on the business models adopted in different electricity markets (Wu et al [60]) and on network tariff architectures (Sakhrani and Parsons [53]). 6 There would be no further problem in using our model for a yearly period on an hourly basis (8,760 steps) apart from the increase in the time required for computation.…”

Section: Introductionmentioning

confidence: 99%

“…Thus, there is an asymmetry in the literature regarding the treatment of physical uncertainties and economic uncertainties. As the electricity market deregulation moves forward this difference in emphasis becomes ever less tenable; Wu et al [60]. We aim at a more balanced approach where uncertainty from market forces coexists more on a par with that stemming from physical infrastructures.…”

Section: Introductionmentioning

confidence: 99%

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Market-based valuation of transmission network expansion. A heuristic application in GB

Gómez

Abadie

Neufville

et al. 2012

Energy

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Transmission investments are currently needed to meet an increasing electricity demand, to address security of supply concerns, and to reach carbon emissions targets. A key issue when assessing the benefits from an expanded grid concerns the valuation of the uncertain cash flows that result from the expansion. We develop a valuation model which combines optimization techniques, Monte Carlo simulation over the expansion project lifetime, and market data from futures contracts on commodities. The model allows for random failures in generation and transmission infrastructure. Uncertainty stems also from nodal loads, fuel prices, allowance prices, wind generation, and hydro generation. Thus the model accounts for the stochastic dynamics on both the demand side and the supply side. To demonstrate the model by example, we consider a simplified network with two nodes. It is intended to broadly resemble the power generation sectors in England/Wales and Scotland. We then focus on the proposed Western HVDC subsea link. We simulate the whole distribution of effects on system costs, carbon emissions, and unserved load.

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Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Market-based valuation of transmission network expansion. A heuristic application in GB

Gómez

Abadie

Neufville

et al. 2012

Energy

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“…Under a market setting, the regulatory authorities face the need to provide incentives for technical and economic efficiency, so that the transmission system is developed at minimum cost, with adequate levels of service quality and reliability, and adapted to the requirements of generators and consumers (Wu and Wen, 2006).…”

Section: Introductionmentioning

confidence: 99%

Designing regulatory frameworks for merchant transmission investments by real options analysis

Pringles¹,

Olsina²,

Garcés³

2014

Energy Policy

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In deregulated electricity markets, the transmission network is a key infrastructure for enabling competition in the generation sector. A deficient expansion of the transmission grid prevents the realization of the benefits in terms of efficiency associated with market mechanisms. Consequently, it is essential to provide clear investment policies and economic signals to attract timely and efficient transmission investments in order to develop the system at minimum cost meeting the requirements of generators and consumers, while keeping adequate levels of service quality and reliability. This paper proposes a modern tool of economic evaluation based on Real Options Analysis that provides the regulator the ability to assess various incentives that would lead transmission investors to make efficient decisions in highly uncertain environments. Real Options properly values partially irreversible investment decisions, such as to defer, modify or abandon an investment project in response to the arrival of new information or as uncertainties are resolved. Decisions are evaluated from the point of view of a transmission investor trying to maximize its own profits in the time period set to recover the capital invested. The results allow the study of the behavior of transmission investors regarding their decision making when they have the possibility to manage the option to defer, under different regulatory schemes that encourage the expansion of the transmission system.

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“…In recent years, a number of researches have been done in the field of the TEP in restructured power systems [1] and [2]. Some of the items that have been regarded in these researches are:…”

Section: Introductionmentioning

confidence: 99%

Market-Based Transmission Expansion Planning Under Uncertainty in Bids by Fuzzy Assessment

Kamyab¹,

Fotuhi-Firuzabad²,

Rashidinejad³

2012

Journal of Electrical Engineering and Technology

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-In this paper, by a simple example it is shown that existing market-based criteria alone cannot completely and correctly evaluate the transmission network expansion from market view. However criteria congestion cost (CC) and social welfare (SW) together are able to correctly evaluate transmission network from market view and so they are adopted for the market-based transmission expansion planning. To simply indicate the limits of CC and SW social welfare percentage (SWP) and congestion cost percentage (CCP) are defined. To consider uncertainty in bids of market producers and consumers, and also indeterminacy in the acceptable boundaries of the SWP and CCP and their priorities, fuzzy assessment approach is used. In this approach, appropriate fuzzy sets and a fuzzy rule base are provided to evaluate the acceptability of an expansion plan. Then, the least-investment cost plan, which is acceptable in all probable scenarios, is searched. The proposed method is applied to an 8-bus system.

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Transmission investment and expansion planning in a restructured electricity market

Cited by 163 publications

References 30 publications

Market-based valuation of transmission network expansion. A heuristic application in GB

Market-based valuation of transmission network expansion. A heuristic application in GB

Designing regulatory frameworks for merchant transmission investments by real options analysis

Market-Based Transmission Expansion Planning Under Uncertainty in Bids by Fuzzy Assessment

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