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Comparison of congestion management techniques: Nodal, zonal and discriminatory pricing

Pär Holmberg and Ewa Lazarczyk

Year: 2015
Volume: Volume 36
Number: Number 2
DOI: 10.5547/01956574.36.2.7
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Abstract:
Wholesale electricity markets use different market designs to handle congestion in the transmission network. We compare nodal, zonal and discriminatory pricing in general networks with transmission constraints and loop flows. We conclude that in large games with many producers and certain information, the three market designs result in the same efficient dispatch. However, zonal pricing with counter-trading results in additional payments to producers in export-constrained nodes, which leads to inefficient investments in the long-run.



European Electricity Grid Infrastructure Expansion in a 2050 Context

Jonas Egerer, Clemens Gerbaulet, and Casimir Lorenz

Year: 2016
Volume: Volume 37
Number: Sustainable Infrastructure Development and Cross-Border Coordination
DOI: https://doi.org/10.5547/01956574.37.SI3.jege
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Abstract:
This paper analyzes the development of the European electricity transmission network for different policy scenarios at the horizon 2050. We apply a bottom-up techno-economic electricity sector model to determine transformation scenarios of the European electricity sector. It has a very detailed spatial disaggregation that allows for a fine representation of domestic and international electricity flows and transmission expansion. The cost-minimizing mixed-integer model calculates investments for time steps of ten years. The model results indicate that network requirements are lower than generally assumed. The largest share are domestic upgrades, rather than country interconnectors. Most investments (20bn EUR) occur in the near future, by 2030 the latest. Only the high-mitigation scenarios require large additional network investments. The timing and location of investments differ, depending on generation scenarios and cost assumptions for inter-connectors. The results indicate that carbon emission reduction targets alone provide insufficient information for long-term network planning.



Vertical Separation of Transmission Control and Regional Production Efficiency in the Electricity Industry

Yin Chu

Year: 2021
Volume: Volume 42
Number: Number 1
DOI: 10.5547/01956574.42.1.ychu
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Abstract:
This study investigates the divestiture of transmission control from vertically-integrated power producers, aimed to maintain non-discriminatory access of the transmission network. I ask whether the vertical separation is sufficient to enhance how efficiently production is allocated among generators (i.e., regional production efficiency). Using a difference-in-difference strategy, I compare the treated region, Southwest Power Pool (SPP), with a control region, where no restructuring activities were implemented. Based on robust empirical results, I fail to find significant market wide evidence of improvement in regional production efficiency associated with the vertical separation of transmission control. However, looking into subgroups of generators, I find mixed evidence of cost savings via reallocation of production resources: (1) coal units are dispatched more efficiently after the restructuring; (2) this is not true for two types of gas units with different combustion technologies and cost efficiency.



Risk-adjusted Social Discount Rates

Frédéric Cherbonnier and Christian Gollier

Year: 2022
Volume: Volume 43
Number: Number 4
DOI: 10.5547/01956574.43.4.fche
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Abstract:
When evaluating public and private investment projects, those that contribute more to the collective risk should be more penalized through an upward adjustment of their discount rate. This paper shows how to estimate the risk-adjusted discount rate for different projects, with applications to the electricity sector. Using the standard framework of consumer theory, we express any investment project's beta in terms of the easier-to-measure price and income elasticities of the goods generated by the project. When considering an investment in production capacity, the beta has a flat term structure, and is positive (negative) for normal (inferior) goods. When considering core infrastructures carrying goods or services, such as energy transmission and distribution assets, the beta has a decreasing term structure with very high values at short horizons for infrastructures facing capacity constraints. We provide a real-case example of a cross-border electricity connection with negative beta for the exporting country.





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