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Proactive planning and valuation of transmission investments in restructured electricity markets

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An Erratum to this article was published on 01 November 2006

Abstract

Traditional methods of evaluating transmission expansions focus on the social impact of the investments based on the current generation stock which may include firm generation expansion plans. In this paper, we evaluate the social welfare implications of transmission investments based on equilibrium models characterizing the competitive interaction among generation firms whose decisions in generation capacity investments and production are affected by both the transmission investments and the congestion management protocols of the transmission system operator. Our analysis shows that both the magnitude of the welfare gains associated with transmission investments and the location of the best transmission expansions may change when the generation expansion response is taken into consideration. We illustrate our results using a 30-bus network example.

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Authors and Affiliations

  1. Industrial and Systems Engineering Department, Pontificia Universidad Católica de Chile, Av. Vicuña Mackenna # 4860, Raúl Deves Hall, Piso 3, Macul, Santiago, Chile

    Enzo E. Sauma

  2. Industrial Engineering and Operations Research Department, University of California at Berkeley, 4141 Etcheverry Hall, Berkeley, CA, 94720, USA

    Shmuel S. Oren

Authors
  1. Enzo E. Sauma
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  2. Shmuel S. Oren
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Correspondence to Enzo E. Sauma.

Additional information

An erratum to this article can be found at http://dx.doi.org/10.1007/s11149-006-9012-x

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Sauma, E.E., Oren, S.S. Proactive planning and valuation of transmission investments in restructured electricity markets. J Regul Econ 30, 261–290 (2006). https://doi.org/10.1007/s11149-006-9003-y

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