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Managing the Electricity Distribution Connection Queue in Great Britain: Lessons from Auction Theory and a Potential Position Trading System

Author

Listed:
  • Pollitt, M. G.
  • Mitchell, R.
  • Duma, D.
  • Covatariu, A.

Abstract

The connection queue in Great Britain (GB) is recognized as a major challenge for transmission and distribution networks and for the energy transition. The queue reached 726 GW in July 2024 for generation and storage, but it is also significant on the demand side. The drivers of this problem have been identified by the government, the regulator and the industry. One of the drivers is the inability of the First Come First Served (FCFS) rule – the de facto system of allocation – to account for the feasibility, progress and value of the different projects applying for connection. This paper explores this latter aspect, by taking inspiration from the literature on auction theory, mechanism design and queuing theory. The paper discusses potential changes to the initial (primary) allocation of connection rights in light of concepts such as the beauty contest and the Knapsack problem, and to queue management by potentially introducing a secondary trading of connection rights to increase efficiency. The paper also discusses the risks and potential biases of such changes, including asymmetric information and strategic behaviour.

Suggested Citation

  • Pollitt, M. G. & Mitchell, R. & Duma, D. & Covatariu, A., 2025. "Managing the Electricity Distribution Connection Queue in Great Britain: Lessons from Auction Theory and a Potential Position Trading System," Cambridge Working Papers in Economics 2534, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camdae:2534
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    References listed on IDEAS

    as
    1. Paul Klemperer, 1999. "Auction Theory: A Guide to the Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 13(3), pages 227-286, July.
    2. Leonard Kleinrock, 1967. "Optimum Bribing for Queue Position," Operations Research, INFORMS, vol. 15(2), pages 304-318, April.
    3. Anouar El Haji & Sander Onderstal, 2019. "Trading places: An experimental comparison of reallocation mechanisms for priority queuing," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 28(4), pages 670-686, November.
    4. KayI, Çagatay & Ramaekers, Eve, 2010. "Characterizations of Pareto-efficient, fair, and strategy-proof allocation rules in queueing problems," Games and Economic Behavior, Elsevier, vol. 68(1), pages 220-232, January.
    5. Myerson, Roger B. & Satterthwaite, Mark A., 1983. "Efficient mechanisms for bilateral trading," Journal of Economic Theory, Elsevier, vol. 29(2), pages 265-281, April.
    6. Klemperer, Paul, 1999. " Auction Theory: A Guide to the Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 13(3), pages 227-86, July.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Distribution System Operators; Auction Theory; Queuing Theory; Grid Connection Queue;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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