IDEAS home Printed from https://ideas.repec.org/a/sae/enejou/v39y2018i6p209-234.html
   My bibliography  Save this article

A Mechanism for Allocating Benefits and Costs from Transmission Interconnections under Cooperation: A Case Study of the North Sea Offshore Grid

Author

Listed:
  • Martin Kristiansen
  • Francisco D. Muñoz
  • Shmuel Oren
  • Magnus KorpÃ¥s

Abstract

We propose a generic mechanism for allocating the benefits and costs that result from the development of international transmission interconnections under a cooperative agreement. The mechanism is based on a planning model that considers generation investments as a response to transmission developments, and the Shapley Value from cooperative game theory. This method provides a unique allocation of benefits and costs considering each country’s average incremental contribution to the cooperative agreement. The allocation satisfies an axiomatic definition of fairness. We demonstrate our results for three planned transmission interconnections in the North Sea and show that the proposed mechanism can be used as a basis for defining a set of Power Purchase Agreements among countries.

Suggested Citation

  • Martin Kristiansen & Francisco D. Muñoz & Shmuel Oren & Magnus KorpÃ¥s, 2018. "A Mechanism for Allocating Benefits and Costs from Transmission Interconnections under Cooperation: A Case Study of the North Sea Offshore Grid," The Energy Journal, , vol. 39(6), pages 209-234, November.
    • Handle: RePEc:sae:enejou:v:39:y:2018:i:6:p:209-234
    DOI: 10.5547/01956574.39.6.mkri
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.5547/01956574.39.6.mkri
    Download Restriction: no
    File URL: https://libkey.io/10.5547/01956574.39.6.mkri?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Francisco Munoz & Jean-Paul Watson, 2015. "A scalable solution framework for stochastic transmission and generation planning problems," Computational Management Science, Springer, vol. 12(4), pages 491-518, October.
    2. Munoz, F.D. & Hobbs, B.F. & Watson, J.-P., 2016. "New bounding and decomposition approaches for MILP investment problems: Multi-area transmission and generation planning under policy constraints," European Journal of Operational Research, Elsevier, vol. 248(3), pages 888-898.
    3. Denholm, Paul & Hand, Maureen, 2011. "Grid flexibility and storage required to achieve very high penetration of variable renewable electricity," Energy Policy, Elsevier, vol. 39(3), pages 1817-1830, March.
    4. Anna Grigoryeva, Mohammad R. Hesamzadeh, and Thomas Tangerås, 2018. "Energy System Transition in the Nordic Market: Challenges for Transmission Regulation and Governance," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 1).
    5. Gorenstein Dedecca, João & Lumbreras, Sara & Ramos, Andrés & Hakvoort, Rudi A. & Herder, Paulien M., 2018. "Expansion planning of the North Sea offshore grid: Simulation of integrated governance constraints," Energy Economics, Elsevier, vol. 72(C), pages 376-392.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Petitet, Marie & Ricaud, Benjamin & Felder, Frank A. & Elshurafa, Amro M., 2025. "Cross-border electricity trading in the GCC countries, Egypt, Jordan and Iraq: Hourly market coupling or bilateral agreements?," Energy, Elsevier, vol. 327(C).
    2. Hassanzadeh Moghimi, Farzad & Boomsma, Trine K. & Siddiqui, Afzal S., 2024. "Transmission planning in an imperfectly competitive power sector with environmental externalities," Energy Economics, Elsevier, vol. 134(C).
    3. Lüth, Alexandra & Keles, Dogan, 2024. "Risks, strategies, and benefits of offshore energy hubs: A literature-based survey," Renewable and Sustainable Energy Reviews, Elsevier, vol. 203(C).
    4. Shu, Han & Mays, Jacob, 2025. "Transmission benefits and cost allocation under ambiguity," Energy Economics, Elsevier, vol. 141(C).
    5. Badesa, Luis & Matamala, Carlos & Strbac, Goran, 2025. "Who should pay for frequency-containment ancillary services? Making responsible units bear the cost to shape investment in generation and loads," Energy Policy, Elsevier, vol. 196(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bergen, Matías & Muñoz, Francisco D., 2018. "Quantifying the effects of uncertain climate and environmental policies on investments and carbon emissions: A case study of Chile," Energy Economics, Elsevier, vol. 75(C), pages 261-273.
    2. Go, Roderick S. & Munoz, Francisco D. & Watson, Jean-Paul, 2016. "Assessing the economic value of co-optimized grid-scale energy storage investments in supporting high renewable portfolio standards," Applied Energy, Elsevier, vol. 183(C), pages 902-913.
    3. Fernández, Mauricio & Muñoz, Francisco D. & Moreno, Rodrigo, 2020. "Analysis of imperfect competition in natural gas supply contracts for electric power generation: A closed-loop approach," Energy Economics, Elsevier, vol. 87(C).
    4. Guandalini, Giulio & Campanari, Stefano & Romano, Matteo C., 2015. "Power-to-gas plants and gas turbines for improved wind energy dispatchability: Energy and economic assessment," Applied Energy, Elsevier, vol. 147(C), pages 117-130.
    5. Rong, Aiying & Lahdelma, Risto, 2017. "An efficient model and algorithm for the transmission-constrained multi-site combined heat and power system," European Journal of Operational Research, Elsevier, vol. 258(3), pages 1106-1117.
    6. Jenkins, J.D. & Zhou, Z. & Ponciroli, R. & Vilim, R.B. & Ganda, F. & de Sisternes, F. & Botterud, A., 2018. "The benefits of nuclear flexibility in power system operations with renewable energy," Applied Energy, Elsevier, vol. 222(C), pages 872-884.
    7. Brunner, Christoph & Deac, Gerda & Braun, Sebastian & Zöphel, Christoph, 2020. "The future need for flexibility and the impact of fluctuating renewable power generation," Renewable Energy, Elsevier, vol. 149(C), pages 1314-1324.
    8. Nayak-Luke, Richard & Bañares-Alcántara, René & Collier, Sam, 2021. "Quantifying network flexibility requirements in terms of energy storage," Renewable Energy, Elsevier, vol. 167(C), pages 869-882.
    9. Lukas Wienholt & Ulf Philipp Müller & Julian Bartels, 2018. "Optimal Sizing and Spatial Allocation of Storage Units in a High-Resolution Power System Model," Energies, MDPI, vol. 11(12), pages 1-17, December.
    10. Merrick, James H. & Bistline, John E.T. & Blanford, Geoffrey J., 2024. "On representation of energy storage in electricity planning models," Energy Economics, Elsevier, vol. 136(C).
    11. Amir Sadegh Zakeri & Hossein Askarian Abyaneh, 2017. "Transmission Expansion Planning Using TLBO Algorithm in the Presence of Demand Response Resources," Energies, MDPI, vol. 10(9), pages 1-15, September.
    12. Gianluca Fulli & Marcelo Masera & Catalin Felix Covrig & Francesco Profumo & Ettore Bompard & Tao Huang, 2017. "The EU Electricity Security Decision-Analytic Framework: Status and Perspective Developments," Energies, MDPI, vol. 10(4), pages 1-20, March.
    13. Min, C.G. & Park, J.K. & Hur, D. & Kim, M.K., 2016. "A risk evaluation method for ramping capability shortage in power systems," Energy, Elsevier, vol. 113(C), pages 1316-1324.
    14. Ma, Huan & Sun, Qinghan & Chen, Qun & Zhao, Tian & He, Kelun, 2023. "Exergy-based flexibility cost indicator and spatio-temporal coordination principle of distributed multi-energy systems," Energy, Elsevier, vol. 267(C).
    15. Arteconi, A. & Hewitt, N.J. & Polonara, F., 2012. "State of the art of thermal storage for demand-side management," Applied Energy, Elsevier, vol. 93(C), pages 371-389.
    16. Denholm, Paul & Brinkman, Greg & Mai, Trieu, 2018. "How low can you go? The importance of quantifying minimum generation levels for renewable integration," Energy Policy, Elsevier, vol. 115(C), pages 249-257.
    17. Andrychowicz, Mateusz & Olek, Blazej & Przybylski, Jakub, 2017. "Review of the methods for evaluation of renewable energy sources penetration and ramping used in the Scenario Outlook and Adequacy Forecast 2015. Case study for Poland," Renewable and Sustainable Energy Reviews, Elsevier, vol. 74(C), pages 703-714.
    18. Frew, Bethany A. & Becker, Sarah & Dvorak, Michael J. & Andresen, Gorm B. & Jacobson, Mark Z., 2016. "Flexibility mechanisms and pathways to a highly renewable US electricity future," Energy, Elsevier, vol. 101(C), pages 65-78.
    19. Kost, Christoph & Flath, Christoph M. & Möst, Dominik, 2013. "Concentrating solar power plant investment and operation decisions under different price and support mechanisms," Energy Policy, Elsevier, vol. 61(C), pages 238-248.
    20. Ilaria Vigna & Jessica Balest & Wilmer Pasut & Roberta Pernetti, 2020. "Office Occupants’ Perspective Dealing with Energy Flexibility: A Large-Scale Survey in the Province of Bolzano," Energies, MDPI, vol. 13(17), pages 1-20, August.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:enejou:v:39:y:2018:i:6:p:209-234. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.