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National-strategic investment in European power transmission capacity

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  • Huppmann, Daniel
  • Egerer, Jonas

Abstract

The transformation of the European electricity system requires substantial investment in transmission capacity to facilitate cross-border trade and to efficiently integrate renewable energy sources. However, network planning in the EU is still mainly a national prerogative. In contrast to other studies aiming to identify the pan-European (continental) welfare-optimal transmission expansion, we investigate the impact of zonal planners deciding on network investment strategically, with the aim of maximizing the sum of consumer surplus, generator profits and congestion rents in their jurisdiction. This reflects the inadequacy of current mechanisms to compensate for welfare re-allocations across national boundaries arising from network upgrades.

Suggested Citation

  • Huppmann, Daniel & Egerer, Jonas, 2015. "National-strategic investment in European power transmission capacity," European Journal of Operational Research, Elsevier, vol. 247(1), pages 191-203.
    • Handle: RePEc:eee:ejores:v:247:y:2015:i:1:p:191-203
    DOI: 10.1016/j.ejor.2015.05.056
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    More about this item

    Keywords

    Electricity transmission; Network expansion; Generalized Nash equilibrium (GNE); Mixed-integer equilibrium problem under equilibrium constraints (MI-EPEC);
    All these keywords.

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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