Transmission Network Investment as an Anticipation Problem
This paper proposes a probabilistic model to evaluate if a proactive TSO that anticipates the connection of new generators with short construction duration compared to the time needed to reinforce the network is more efficient than a reactive TSO that does not make any anticipation but that may then face higher congestion while the network is being reinforced. This evaluation is made in presence of anticipation costs both related to the study of the project of network investment and to the administrative procedures needed to obtain the building agreement. Our results in terms of social costs clearly show a limit of probability for the connection of generators beyond which a proactive TSO is more efficient than a reactive TSO. Evaluated on realistic cases of connection, this limit of probability is found quite low, which indicates that the proactive behaviour for a TSO shall generally be the optimal one.
|Date of creation:||19 Jan 2010|
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- Boyle, Glenn & Guthrie, Graeme & Meade, Richard, 2006. "Real Options and Transmission Investment: the New Zealand Grid Investment Test," Working Paper Series 3846, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
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