Merchant Electricity Transmission Expansion: A European Case Study
AbstractWe apply a merchant transmission model to the trilateral market coupling (TLC) arrangement among the Netherlands, Belgium and France as a generic example, and note that it can be applied to any general market splitting or coupling of Europe's different national power markets. In this merchant framework; the system operator allocates financial transmission rights (FTRs) to investors in transmission expansion based upon their preferences, and revenue adequacy. The independent system operator (ISO) preserves some proxy FTRs to deal with potential negative externalities due to an expansion project. This scheme proves to be capable in providing incentives for investment in transmission expansion projects within TLC areas.
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Bibliographic InfoPaper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 1028.
Length: 22 p.
Date of creation: 2010
Date of revision:
Publication status: Published in: Energy 35 (2010) Iss. 10, 4107-4115
transmission expansion; trilateral market coupling; Europe; financial transmission rights; congestion management;
Other versions of this item:
- Juan Rosellon & Tarjei Kristiansen, 2007. "Merchant Electricity Transmission Expansion: A European Case Study," Documentos de Trabajo DTE 391, CIDE, Division de Economia.
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General
- L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
- Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-07-17 (All new papers)
- NEP-ENE-2010-07-17 (Energy Economics)
- NEP-EUR-2010-07-17 (Microeconomic European Issues)
- NEP-PPM-2010-07-17 (Project, Program & Portfolio Management)
- NEP-REG-2010-07-17 (Regulation)
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- Zenon, Eric & Rosellon, Juan, 2010.
"Expansión de las Redes de Transmisión Eléctrica en Norteamérica: Teoría y Aplicaciones
[The Expansion of Electricity Networks in North America: Theory and Applications]," MPRA Paper 26470, University Library of Munich, Germany.
- Juan Rosellón & Eric Zenón, 2010. "Expansión de las redes de transmisión eléctrica en Norteamérica: Teoría y aplicaciones," Documentos de Trabajo DTE 479, CIDE, Division de Economia.
- Pollitt, M. J., 2011. "Lessons from the History of Independent System Operators in the Energy Sector, with applications to the Water Sector," Cambridge Working Papers in Economics 1153, Faculty of Economics, University of Cambridge.
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