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A Dynamic Incentive Mechanism for Transmission Expansion in Electricity Networks: Theory, Modeling and Application
JournalArticle (Originalarbeit in einer wissenschaftlichen Zeitschrift)
 
ID 1008102
Author(s) Rosellón, Juan; Weigt, Hannes
Author(s) at UniBasel Weigt, Hannes
Year 2011
Title A Dynamic Incentive Mechanism for Transmission Expansion in Electricity Networks: Theory, Modeling and Application
Journal The energy journal
Volume 32
Number 1
Pages / Article-Number 119-148
Abstract We propose a price-cap mechanism for electricity-transmission expansion based on redefining transmission output in terms of financial transmission rights. Our mechanism applies the incentive-regulation logic of rebalancing a two-part tariff. First, we test this mechanism in a three-node network. We show that the mechanism intertemporally promotes an investment pattern that relieves congestion, increases welfare, augments the Transco's profits, and induces convergence of prices to marginal costs. We then apply the mechanism to a grid of northwestern Europe and show a gradual convergence toward a common-price benchmark, an increase in total capacity, and convergence toward the welfare optimum.
Publisher International Association for Energy Economics
ISSN/ISBN 0195-6574 ; 1944-9089
URL http://www.jstor.org/stable/41323395
edoc-URL http://edoc.unibas.ch/46955/
Full Text on edoc No
Digital Object Identifier DOI 10.2139/ssrn.1136773
ISI-Number WOS:000285563600005
Document type (ISI) Article
 
   

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