IDEAS home Printed from https://ideas.repec.org/p/cam/camdae/2646.html

Minimising System Costs: Reforming Transmission Charges and Renewable Electricity Contracts

Author

Listed:
  • Newbery, D. M.

Abstract

European energy plans envisage a large increase in Variable Renewable Electricity (VRE), often located distant from demand and congesting existing transmission. Many countries recognise the importance of better locational signals for investment and operation, and possible changes to VRE support systems to reduce risk and cost. This article argues that an efficient low-carbon transition requires a suitable portfolio of reforms to transmission and market pricing and VRE support design, with different combinations suitable when some options (like spatial transmission charges or locational wholesale pricing) are ruled out. Forward-looking spatial transmission contracts offer the simplest decentralised solution for least-cost VRE expansion plans, failing which spatial planning may be needed to coordinate transmission delivery with VRE commissioning.

Suggested Citation

  • Newbery, D. M., 2026. "Minimising System Costs: Reforming Transmission Charges and Renewable Electricity Contracts," Cambridge Working Papers in Economics 2646, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camdae:2646
    as

    Download full text from publisher

    File URL: https://www.econ.cam.ac.uk/sites/default/files/publication-cwpe-pdfs/cwpe2646.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. David Newbery, 2026. "Minimising system costs: reforming transmission charges and renewable electricity contracts," Working Papers EPRG2611, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    2. Newbery, David M. & Biggar, Darryl R., 2024. "Marginal curtailment of wind and solar PV: Transmission constraints, pricing and access regimes for efficient investment," Energy Policy, Elsevier, vol. 191(C).
    3. Simshauser, Paul, 2021. "Renewable Energy Zones in Australia's National Electricity Market," Energy Economics, Elsevier, vol. 101(C).
    4. Newbery, D. & Biggar, D., 2024. "Marginal curtailment of wind and solar PV: transmission constraints, pricing and access regimes for efficient investment," Cambridge Working Papers in Economics 2405, Faculty of Economics, University of Cambridge.
    5. David Newbery & Darryl Biggar, 2024. "Marginal curtailment of wind and solar PV: transmission constraints, pricing and access regimes for efficient investment," Working Papers EPRG2401, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    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. David Newbery, 2026. "Minimising system costs: reforming transmission charges and renewable electricity contracts," Working Papers EPRG2611, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.

    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. Simshauser, P. & Shellshear, E., 2026. "Renewable Energy Zones: Generator Cost Allocation Under Uncertainty," Cambridge Working Papers in Economics 2524, Faculty of Economics, University of Cambridge.
    2. Simshauser, Paul, 2025. "Competition vs. coordination: Optimising wind, solar and batteries in renewable energy zones," Energy Economics, Elsevier, vol. 143(C).
    3. David Newbery, 2026. "Minimising system costs: reforming transmission charges and renewable electricity contracts," Working Papers EPRG2611, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    4. Paul Simshauser & Evan Shellshear, 2025. "Renewable Energy Zones: generator cost allocation under uncertainty [Revised version]," Working Papers EPRG2506, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    5. Newbery, David, 2025. "Implications of renewable electricity curtailment for delivered costs," Energy Economics, Elsevier, vol. 145(C).
    6. Zhan, Xuhao & Guo, Bowei, 2026. "Electric vehicles to the grid: Costs, benefits, and pricing mechanisms," Energy Economics, Elsevier, vol. 155(C).
    7. David M. Newbery, 2025. "Estimating the Target-Consistent Carbon Price for Electricity," The Energy Journal, , vol. 46(1), pages 25-43, January.
    8. Holmberg, Pär, 2024. "The Inc-Dec Game and How to Mitigate It," Working Paper Series 1512, Research Institute of Industrial Economics.
    9. Ma, Zhenxi & Zhang, Xiao & Sun, Li & Liang, Wenqing & Cai, Liang, 2025. "Design and optimization of a solar distributed energy system based on a power-methanol-power path," Energy, Elsevier, vol. 328(C).
    10. Simshauser, Paul, 2024. "On static vs. dynamic line ratings in renewable energy zones," Energy Economics, Elsevier, vol. 129(C).
    11. Paul Simshauser & Farhad Billimoria & Craig Rogers, 2021. "Optimising VRE plant capacity in Renewable Energy Zones," Working Papers EPRG2121, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    12. Muhammad Zubair Chishti & Arshian Sharif & Qi Xu & Gagan Deep Sharma, 2024. "Toward sustainable development: Revealing the dynamic impacts of the belt and road initiative on energy transition," Sustainable Development, John Wiley & Sons, Ltd., vol. 32(6), pages 7069-7095, December.
    13. Simshauser, Paul & Newbery, David, 2024. "Non-firm vs priority access: On the long run average and marginal costs of renewables in Australia," Energy Economics, Elsevier, vol. 136(C).
    14. Stephen Littlechild & Ross Baldick, 2026. "The significance of the Texas CREZ process for transmission planning today," Working Papers EPRG2616, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    15. Mwampashi, Muthe Mathias & Nikitopoulos, Christina Sklibosios & Rai, Alan & Konstandatos, Otto, 2022. "Large-scale and rooftop solar generation in the NEM: A tale of two renewables strategies," Energy Economics, Elsevier, vol. 115(C).
    16. Simshauser, Paul & Billimoria, Farhad & Rogers, Craig, 2022. "Optimising VRE capacity in Renewable Energy Zones," Energy Economics, Elsevier, vol. 113(C).
    17. Gohdes, Nicholas & Simshauser, Paul & Wilson, Clevo, 2023. "Renewable investments, hybridised markets and the energy crisis: Optimising the CfD-merchant revenue mix," Energy Economics, Elsevier, vol. 125(C).
    18. McDonald, Paul, 2023. "Locational and market value of Renewable Energy Zones in Queensland," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 198-213.
    19. McDonald, Paul, 2024. "Interrelationships of renewable energy zones in Queensland: localised effects on capacity value and congestion," Economic Analysis and Policy, Elsevier, vol. 81(C), pages 818-833.
    20. Clapin, Lachlan & Longden, Thomas, 2024. "Waiting to generate: An analysis of onshore wind and solar PV project development lead-times in Australia," Energy Economics, Elsevier, vol. 131(C).

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:cam:camdae:2646. 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: Jake Dyer (email available below). General contact details of provider: https://www.econ.cam.ac.uk/ .

    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.