Maurovich-Horvat, L;
Boomsma, TK;
Siddiqui, AS;
(2015)
Transmission and Wind Investment in a Deregulated Electricity Industry.
In:
Proceedings of 2013 10th International Conference on the European Energy Market (EEM).
(pp. pp. 1633-1643).
IEEE: Stockholm, Sweden.
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Abstract
Adoption of dispersed renewable energy technologies requires transmission network expansion. Besides the transmission system operator (TSO), restructuring of electricity industries has introduced a merchant investor (MI), who earns congestion rents from constructing new lines. We compare these two market designs via a stochastic bi-level programming model that has either the MI or the TSO making transmission investment decisions at the upper level and power producers determining generation investment and operation at the lower level while facing wind power variability. We find that social welfare is always higher under the TSO because the MI has incentive to boost congestion rents by restricting capacities of transmission lines. Such strategic behaviour also limits investment in wind power by producers. However, regardless of the market design (MI or TSO), when producers behave a la Cournot, a higher proportion of energy is produced by wind. In effect, withholding of generation capacity by producers prompts more transmission investment since the TSO aims to increase welfare by subsidising wind and the MI creates more flow to maximise profit.
| Type: | Proceedings paper |
|---|---|
| Title: | Transmission and Wind Investment in a Deregulated Electricity Industry |
| Event: | 2013 10th International Conference on the European Energy Market (EEM) |
| Open access status: | An open access version is available from UCL Discovery |
| DOI: | 10.1109/TPWRS.2014.2367107 |
| Publisher version: | http://doi.org/10.1109/EEM.2013.6607407 |
| Language: | English |
| Additional information: | This work is licensed under a Creative Commons Attribution 3.0 License. For more information, see http://creativecommons.org/licenses/by/3.0/ |
| Keywords: | wind power, Market design, mathematical programming with equilibrium constraints (MPEC), transmission |
| UCL classification: | UCL UCL > Provost and Vice Provost Offices > UCL BEAMS UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Maths and Physical Sciences UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Maths and Physical Sciences > Dept of Statistical Science |
| URI: | https://discovery.ucl.ac.uk/id/eprint/1453898 |
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