Transmission Investment in the Peruvian Electricity Market: Theory and Applications
AbstractThis research presents an application of the Hogan, Rosellón and Vogelsang (2010) (HRV) mechanism to promote electricity transmission network expansion in the Peruvian electricity transmission system known as SEIN (Sistema Eléctrico Interconectado Nacional). The HRV mechanism combines the merchant and regulatory approaches to promote investment into transmission grids. This mechanism gives incentives for efficient investment in expansion of the network by the rebalancing over time of the fixed and variable charges of a two-part tariff in the framework of a wholesale electricity market with locational pricing. The expansion of the network is carried out through the sale of Financial Transmission Rights (FTR's) for the congested lines. The mechanism is applied for 103 nodes of the SEIN using detailed characteristics of generators, nodes and transmission lines. Under Laspeyres weights and linear cost of expansion of transmission capacity, it is shown that prices converge to lower levels as a result of increased transmission capacity.
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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 1171.
Length: 25 p.
Date of creation: 2011
Date of revision:
Publication status: Published in: Energy Policy 47 (2012), 238-245
Electricity transmission expansion; incentive regulation; Peru; congestion management;
Other versions of this item:
- Ruiz, Erix & Rosellón, Juan, 2012. "Transmission investment in the Peruvian electricity market: Theory and applications," Energy Policy, Elsevier, vol. 47(C), pages 238-245.
- 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-2011-11-14 (All new papers)
- NEP-ENE-2011-11-14 (Energy Economics)
- NEP-IND-2011-11-14 (Industrial Organization)
- NEP-REG-2011-11-14 (Regulation)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- William Hogan & Juan Rosellón & Ingo Vogelsang, 2010.
"Toward a combined merchant-regulatory mechanism for electricity transmission expansion,"
Journal of Regulatory Economics,
Springer, vol. 38(2), pages 113-143, October.
- William Hogan & Juan Rosellón & Ingo Vogelsang, 2010. "Toward a Combined Merchant-Regulatory Mechanism for Electricity Transmission Expansion," Discussion Papers of DIW Berlin 1025, DIW Berlin, German Institute for Economic Research.
- Juan Rosellón & Zdenka Mysliková & Eric Zenón, 2010.
"Incentives for Transmission Investment in the PJM Electricity Market: FTRs or Regulation (or Both?),"
Discussion Papers of DIW Berlin
1026, DIW Berlin, German Institute for Economic Research.
- Rosellón, Juan & Myslíková, Zdenka & Zenón, Eric, 2011. "Incentives for transmission investment in the PJM electricity market: FTRs or regulation (or both?)," Utilities Policy, Elsevier, vol. 19(1), pages 3-13, January.
- Rosellon, Juan & Weigt, Hannes, 2008.
"A Dynamic Incentive Mechanism for Transmission Expansion in Electricity Networks – Theory, Modeling and Application,"
22843, University Library of Munich, Germany.
- Juan Rosell�n & Hannes Weigt, 2011. "A Dynamic Incentive Mechanism for Transmission Expansion in Electricity Networks: Theory, Modeling, and Application," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 119-148.
- Juan Rosellón & Hannes Weigt, 2010. "A Dynamic Incentive Mechanism for Transmission Expansion in Electricity Networks: Theory, Modeling, and Application," Discussion Papers of DIW Berlin 1019, DIW Berlin, German Institute for Economic Research.
- Vogelsang, Ingo, 2001. "Price Regulation for Independent Transmission Companies," Journal of Regulatory Economics, Springer, vol. 20(2), pages 141-65, September.
- Ingo Vogelsang, 2006.
"Electricity Transmission Pricing and Performance-based Regulation,"
The Energy Journal,
International Association for Energy Economics, vol. 0(Number 4), pages 97-126.
- Ingo Vogelsang, 2005. "Electricity Transmission Pricing and Performance-Based Regulation," CESifo Working Paper Series 1474, CESifo Group Munich.
- Jonas Egerer & Juan Rosellón & Wolf-Peter Schill, 2013. "Power System Transformation towards Renewables: An Evaluation of Regulatory Approaches for Network Expansion," Discussion Papers of DIW Berlin 1312, DIW Berlin, German Institute for Economic Research.
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