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Regulation of access, fees, and investment planning of transmission in Great Britain

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  • Newbery, D.

Abstract

Liberalized electricity markets require unbundling transmission from generation. For least system cost, generation needs to locate to minimize generation and transmission investment and operation cost. Britain offers a good example of the challenges of and responses to setting transmission access fees to guide the location of massive renewables entry, very differently located to old fossil plants for which the grid was designed. Over-rewarding renewables pre-2014 worked strongly against these location signals, amplifying congestion. Proposals to coordinate transmission and generation off-shore show considerable benefits but coordination needs to be extended on-shore. Partial Locational Marginal Pricing (LMP in the realtime market might deliver less than full LMP but at much lower cost. Modest changes to transmission and auctioned renewables contracts could deliver quick coordination benefits independent of LMP.

Suggested Citation

  • Newbery, D., 2023. "Regulation of access, fees, and investment planning of transmission in Great Britain," Cambridge Working Papers in Economics 2335, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camdae:2335
    Note: dmgn
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    File URL: https://www.econ.cam.ac.uk/research-files/repec/cam/pdf/cwpe2335.pdf
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    References listed on IDEAS

    as
    1. Newbery, David M., 1997. "Determining the regulatory asset base for utility price regulation," Utilities Policy, Elsevier, vol. 6(1), pages 1-8, March.
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    Cited by:

    1. Paul Simshauser, 2023. "The regulation of electricity transmission in Australia's national electricity market: user charges, investment and access," Working Papers EPRG2311, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.

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    More about this item

    Keywords

    transmission fees; regulation; off-shore wind; LMP;
    All these keywords.

    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

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