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Market-based Investment in Electricity Transmission Networks: Controllable Flow

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  • Brunekreeft, G.

Abstract

This paper discusses unregulated market-based electricity transmission investment by third parties as opposed to regulated investment by designated transmission system operators. The analysis is set against a European and Australian institutional background and focuses on interconnection of different systems. The paper explores four areas: economies of scale, market power, detrimental investment and risks. The analysis argues for restricting market-based investment to controllable flow (DC or FACTS) only. This is in line with what seems to take place in practice in Europe and Australia, it strikes a balance between pros and cons of market-based investment and draws a sharp line between regulated and unregulated investments.

Suggested Citation

  • Brunekreeft, G., 2003. "Market-based Investment in Electricity Transmission Networks: Controllable Flow," Cambridge Working Papers in Economics 0340, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camdae:0340
    Note: CMI, IO
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    File URL: http://www.econ.cam.ac.uk/electricity/publications/wp/ep29.pdf
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    References listed on IDEAS

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    Cited by:

    1. Turvey, Ralph, 2006. "Interconnector economics," Energy Policy, Elsevier, vol. 34(13), pages 1457-1472, September.
    2. Brunekreeft, Gert & Neuhoff, Karsten & Newbery, David, 2005. "Electricity transmission: An overview of the current debate," Utilities Policy, Elsevier, vol. 13(2), pages 73-93, June.
    3. Brunekreeft, G., 2004. "‘Regulatory Issues in Merchant Transmission Investment’," Cambridge Working Papers in Economics 0422, Faculty of Economics, University of Cambridge.

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    More about this item

    Keywords

    electricity; transmission; merchant; investment;
    All these keywords.

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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