IDEAS home Printed from https://ideas.repec.org/p/cam/camdae/2362.html
   My bibliography  Save this paper

On Static vs. Dynamic Line Ratings in Renewable Energy Zones

Author

Listed:
  • Simshauser, P.

Abstract

Scaling-up Variable Renewable Energy will face critical bottlenecks vis-a-vis requisite transmission hosting capacity. Network developments must navigate the complexity of encroaching on private land, risk disturbing sites of cultural significance, compete with other environmental (i.e. biodiversity) objectives, and endure backlash from directly affected communities. Transmission is costly and post-pandemic supply-chain constraints are sending equipment costs higher. Given time and cost risks, existing transmission networks and successful augmentations need to function at their outer operating envelope. In this article, a Renewable Energy Zone (REZ) is examined by comparing static and real-time dynamic line ratings. Historically, static line ratings in the Queensland region of Australia's National Electricity Market reflected the still, hot conditions that characterised critical event maximum demand days. Widespread take-up rates of rooftop solar PV has shifted maximum (grid-supplied) demand to the late-afternoon when wind speeds are rising, which also provides thermal cooling to transmission lines. Optimisation modelling suggests a shift from static to dynamic line ratings for a reference 275kV radial REZ in Queensland can increase wind hosting capacity from ~1700MW to more than 2800MW with limited change in the asset base. Dynamically adjusting Frequency Control Ancillary Services further increases VRE hosting capacity.

Suggested Citation

  • Simshauser, P., 2023. "On Static vs. Dynamic Line Ratings in Renewable Energy Zones," Cambridge Working Papers in Economics 2362, Faculty of Economics, University of Cambridge.
  • Handle: RePEc:cam:camdae:2362
    as

    Download full text from publisher

    File URL: https://www.econ.cam.ac.uk/research-files/repec/cam/pdf/cwpe2362.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Paul L. Joskow, 2001. "California's Electricity Crisis," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 17(3), pages 365-388.
    2. Paul Joskow & Jean Tirole, 2007. "Reliability and competitive electricity markets," RAND Journal of Economics, RAND Corporation, vol. 38(1), pages 60-84, March.
    3. van der Weijde, Adriaan Hendrik & Hobbs, Benjamin F., 2012. "The economics of planning electricity transmission to accommodate renewables: Using two-stage optimisation to evaluate flexibility and the cost of disregarding uncertainty," Energy Economics, Elsevier, vol. 34(6), pages 2089-2101.
    4. Borenstein, Severin & Bushnell, James & Wolak, Frank, 2002. "Measuring Market Inefficiencies in California's Deregulated Electricity Industry," Staff General Research Papers Archive 13136, Iowa State University, Department of Economics.
    5. Michael Grubb and David Newbery, 2018. "UK Electricity Market Reform and the Energy Transition: Emerging Lessons," The Energy Journal, International Association for Energy Economics, vol. 0(Number 6).
    6. Gohdes, N. & Simshauser, P., 2022. "Renewable entry costs, project finance and the role of revenue quality in Australia’s National Electricity Market," Cambridge Working Papers in Economics 2206, Faculty of Economics, University of Cambridge.
    7. Mette Bjorndal & Kurt Jornsten, 2001. "Zonal Pricing in a Deregulated Electricity Market," The Energy Journal, , vol. 22(1), pages 51-73, January.
    8. Neuhoff, Karsten & Barquin, Julian & Bialek, Janusz W. & Boyd, Rodney & Dent, Chris J. & Echavarren, Francisco & Grau, Thilo & von Hirschhausen, Christian & Hobbs, Benjamin F. & Kunz, Friedrich & Nabe, 2013. "Renewable electric energy integration: Quantifying the value of design of markets for international transmission capacity," Energy Economics, Elsevier, vol. 40(C), pages 760-772.
    9. Roques, Fabien & Finon, Dominique, 2017. "Adapting electricity markets to decarbonisation and security of supply objectives: Toward a hybrid regime?," Energy Policy, Elsevier, vol. 105(C), pages 584-596.
    10. Paul Simshauser and Joel Gilmore, 2020. "On Entry Cost Dynamics in Australia's National Electricity Market," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1).
    11. Ruderer, Dominik & Zöttl, Gregor, 2018. "Transmission pricing and investment incentives," Utilities Policy, Elsevier, vol. 55(C), pages 14-30.
    12. Simshauser, Paul & Billimoria, Farhad & Rogers, Craig, 2022. "Optimising VRE capacity in Renewable Energy Zones," Energy Economics, Elsevier, vol. 113(C).
    13. Jakob Peter and Johannes Wagner, 2021. "Optimal Allocation of Variable Renewable Energy Considering Contributions to Security of Supply," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 229-260.
    14. M. Pollitt, 2004. "Electricity reform in Chile. Lessons for developing countries," Competition and Regulation in Network Industries, Intersentia, vol. 5(3), pages 221-263, September.
    15. repec:bla:opecrv:v:32:y:2008:i:2:p:150-183 is not listed on IDEAS
    16. Johannes Wagner, 2019. "Grid Investment and Support Schemes for Renewable Electricity Generation," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
    17. Jansen, Malte & Beiter, Philipp & Riepin, Iegor & Müsgens, Felix & Guajardo-Fajardo, Victor Juarez & Staffell, Iain & Bulder, Bernard & Kitzing, Lena, 2022. "Policy choices and outcomes for offshore wind auctions globally," Energy Policy, Elsevier, vol. 167(C).
    18. Alayo, Hans & Rider, Marcos J. & Contreras, Javier, 2017. "Economic externalities in transmission network expansion planning," Energy Economics, Elsevier, vol. 68(C), pages 109-115.
    19. Frank A. Wolak, 2022. "Long-Term Resource Adequacy in Wholesale Electricity Markets with Significant Intermittent Renewables," Environmental and Energy Policy and the Economy, University of Chicago Press, vol. 3(1), pages 155-220.
    20. David P. Brown & Jay Zarnikau & Chi-Keung Woo, 2020. "Does locational marginal pricing impact generation investment location decisions? An analysis of Texas’s wholesale electricity market," Journal of Regulatory Economics, Springer, vol. 58(2), pages 99-140, December.
    21. Munoz, Francisco D. & van der Weijde, Adriaan Hendrik & Hobbs, Benjamin F. & Watson, Jean-Paul, 2017. "Does risk aversion affect transmission and generation planning? A Western North America case study," Energy Economics, Elsevier, vol. 64(C), pages 213-225.
    22. Jacob Mays & David P. Morton & Richard P. O’Neill, 2019. "Asymmetric risk and fuel neutrality in electricity capacity markets," Nature Energy, Nature, vol. 4(11), pages 948-956, November.
    23. David M. Newbery & Michael G. Pollitt, 1997. "The Restructuring and Privatisation of Britain's CEGB—Was It Worth It?," Journal of Industrial Economics, Wiley Blackwell, vol. 45(3), pages 269-303, September.
    24. Mills, S.J. & Taylor, Melissa, 1994. "Project finance for renewable energy," Renewable Energy, Elsevier, vol. 5(1), pages 700-708.
    25. Dodd, Tracey & Nelson, Tim, 2022. "Australian household adoption of solar photovoltaics: A comparative study of hardship and non-hardship customers," Energy Policy, Elsevier, vol. 160(C).
    26. Jan Abrell & Friedrich Kunz, 2015. "Integrating Intermittent Renewable Wind Generation - A Stochastic Multi-Market Electricity Model for the European Electricity Market," Networks and Spatial Economics, Springer, vol. 15(1), pages 117-147, March.
    27. Newbery, David, 2016. "Missing money and missing markets: Reliability, capacity auctions and interconnectors," Energy Policy, Elsevier, vol. 94(C), pages 401-410.
    28. Eicke, Anselm & Khanna, Tarun & Hirth, Lion, 2020. "Locational investment signals - How to steer the siting of new generation capacity in power systems?," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 41(6), pages 281-304.
    29. Keppler, Jan Horst & Quemin, Simon & Saguan, Marcelo, 2022. "Why the sustainable provision of low-carbon electricity needs hybrid markets," Energy Policy, Elsevier, vol. 171(C).
    30. Paul L. Joskow, 1987. "Productivity Growth and Technical Change in the Generation of Electricity," The Energy Journal, , vol. 8(1), pages 17-38, July.
    31. OGGIONI, Giorgia & MURPHY, Frederic H. & SMEERS, Yves, 2014. "Evaluating the impacts of priority dispatch in the European electricity market," LIDAM Reprints CORE 2554, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    32. Grimm, Veronika & Martin, Alexander & Weibelzahl, Martin & Zöttl, Gregor, 2016. "On the long run effects of market splitting: Why more price zones might decrease welfare," Energy Policy, Elsevier, vol. 94(C), pages 453-467.
    33. Richard A. Posner, 1974. "Theories of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 5(2), pages 335-358, Autumn.
    34. Adriaan Weijde & Benjamin Hobbs, 2011. "Locational-based coupling of electricity markets: benefits from coordinating unit commitment and balancing markets," Journal of Regulatory Economics, Springer, vol. 39(3), pages 223-251, June.
    35. Alan Rai & Tim Nelson, 2021. "Financing costs and barriers to entry in Australia’s electricity market," Journal of Financial Economic Policy, Emerald Group Publishing Limited, vol. 13(6), pages 730-754, March.
    36. Severin Borenstein & James B. Bushnell & Frank A. Wolak, 2002. "Measuring Market Inefficiencies in California's Restructured Wholesale Electricity Market," American Economic Review, American Economic Association, vol. 92(5), pages 1376-1405, December.
    37. Alan Rai & Tim Nelson, 2020. "Australia's National Electricity Market after Twenty Years," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 53(2), pages 165-182, June.
    38. Giorgia Oggioni and Yves Smeers, 2012. "Degrees of Coordination in Market Coupling and Counter-Trading," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    39. Ignacio Aravena & Anthony Papavasiliou, 2017. "Renewable energy integration in zonal markets," LIDAM Reprints CORE 2932, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    40. Leuthold, Florian & Weigt, Hannes & von Hirschhausen, Christian, 2008. "Efficient pricing for European electricity networks - The theory of nodal pricing applied to feeding-in wind in Germany," Utilities Policy, Elsevier, vol. 16(4), pages 284-291, December.
    41. Mountain, Bruce & Littlechild, Stephen, 2010. "Comparing electricity distribution network revenues and costs in New South Wales, Great Britain and Victoria," Energy Policy, Elsevier, vol. 38(10), pages 5770-5782, October.
    42. Kann, Shayle, 2009. "Overcoming barriers to wind project finance in Australia," Energy Policy, Elsevier, vol. 37(8), pages 3139-3148, August.
    43. David Newbery, 2021. "Strengths and weaknesses of the British market model," Chapters, in: Jean-Michel Glachant & Paul L. Joskow & Michael G. Pollitt (ed.), Handbook on Electricity Markets, chapter 6, pages 156-181, Edward Elgar Publishing.
    44. Paul L Joskow, 2019. "Challenges for wholesale electricity markets with intermittent renewable generation at scale: the US experience," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 35(2), pages 291-331.
    45. Richard Green, 2007. "Nodal pricing of electricity: how much does it cost to get it wrong?," Journal of Regulatory Economics, Springer, vol. 31(2), pages 125-149, April.
    46. Pär Holmberg and Ewa Lazarczyk, 2015. "Comparison of congestion management techniques: Nodal, zonal and discriminatory pricing," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
    47. Engelhorn, Thorsten & Müsgens, Felix, 2021. "Why is Germany’s energy transition so expensive? Quantifying the costs of wind-energy decentralisation," Resource and Energy Economics, Elsevier, vol. 65(C).
    48. David Newbery, 2023. "Efficient Renewable Electricity Support: Designing an Incentive-compatible Support Scheme," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    49. Farhad Billimoria & Paul Simshauser, 2023. "Contract design for storage in hybrid electricity markets," Working Papers EPRG2304, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    50. Simshauser, P., 2021. "Renewable Energy Zones in Australia’s National Electricity Market," Cambridge Working Papers in Economics 2119, Faculty of Economics, University of Cambridge.
    51. Simshauser, Paul, 2022. "Rooftop solar PV and the peak load problem in the NEM's Queensland region," Energy Economics, Elsevier, vol. 109(C).
    52. 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).
    53. Joskow, Paul L., 2008. "Capacity payments in imperfect electricity markets: Need and design," Utilities Policy, Elsevier, vol. 16(3), pages 159-170, September.
    54. Enzo Sauma & Shmuel Oren, 2006. "Proactive planning and valuation of transmission investments in restructured electricity markets," Journal of Regulatory Economics, Springer, vol. 30(3), pages 358-387, November.
    55. Tim Nelson, 2015. "Australian Climate Change Policy – Where To From Here?," Economic Papers, The Economic Society of Australia, vol. 34(4), pages 257-272, December.
    56. Enzo Sauma & Shmuel Oren, 2006. "Proactive planning and valuation of transmission investments in restructured electricity markets," Journal of Regulatory Economics, Springer, vol. 30(3), pages 261-290, November.
    57. Steffen, Bjarne, 2018. "The importance of project finance for renewable energy projects," Energy Economics, Elsevier, vol. 69(C), pages 280-294.
    58. Tracey Dodd & Tim Nelson, 2019. "Trials and tribulations of market responses to climate change: Insight through the transformation of the Australian electricity market," Australian Journal of Management, Australian School of Business, vol. 44(4), pages 614-631, November.
    59. Nelson, Tim & Nelson, James & Ariyaratnam, Jude & Camroux, Simon, 2013. "An analysis of Australia's large scale renewable energy target: Restoring market confidence," Energy Policy, Elsevier, vol. 62(C), pages 386-400.
    60. Simshauser, Paul, 2017. "Monopoly regulation, discontinuity & stranded assets," Energy Economics, Elsevier, vol. 66(C), pages 384-398.
    61. Simshauser, Paul & Gilmore, Joel, 2022. "Climate change policy discontinuity & Australia's 2016-2021 renewable investment supercycle," Energy Policy, Elsevier, vol. 160(C).
    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. Simshauser, P. & Gohde, N., 2024. "3-Party Covenant Financing of ‘Semi-Regulated’ Pumped Hydro Assets," Cambridge Working Papers in Economics 2425, Faculty of Economics, University of Cambridge.
    2. Li, Carmen & Chyong, Chi Kong & Reiner, David M. & Roques, Fabien, 2024. "Taking a Portfolio approach to wind and solar deployment: The case of the National Electricity Market in Australia," Applied Energy, Elsevier, vol. 369(C).

    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. 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.
    2. Simshauser, Paul, 2021. "Renewable Energy Zones in Australia's National Electricity Market," Energy Economics, Elsevier, vol. 101(C).
    3. Simshauser, Paul & Billimoria, Farhad & Rogers, Craig, 2022. "Optimising VRE capacity in Renewable Energy Zones," Energy Economics, Elsevier, vol. 113(C).
    4. 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).
    5. 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).
    6. Simshauser, P., 2021. "Renewable Energy Zones in Australia’s National Electricity Market," Cambridge Working Papers in Economics 2119, Faculty of Economics, University of Cambridge.
    7. Gohdes, Nicholas, 2023. "Unhedged risk in hybrid energy markets: Optimising the revenue mix of Australian solar," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 1363-1380.
    8. Gohdes, Nicholas & Simshauser, Paul & Wilson, Clevo, 2022. "Renewable entry costs, project finance and the role of revenue quality in Australia's National Electricity Market," Energy Economics, Elsevier, vol. 114(C).
    9. Gohdes, N.Nicholas & Simshauser,P. & Wilson, C., 2023. "Renewable investments in hybridised energy markets: optimising the CfD-merchant revenue mix," Cambridge Working Papers in Economics 2334, Faculty of Economics, University of Cambridge.
    10. Ambrosius, M. & Egerer, J. & Grimm, V. & Weijde, A.H. van der, 2020. "Uncertain bidding zone configurations: The role of expectations for transmission and generation capacity expansion," European Journal of Operational Research, Elsevier, vol. 285(1), pages 343-359.
    11. McDonald, Paul, 2023. "Locational and market value of Renewable Energy Zones in Queensland," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 198-213.
    12. Gohdes, N. & Simshauser, P., 2022. "Renewable entry costs, project finance and the role of revenue quality in Australia’s National Electricity Market," Cambridge Working Papers in Economics 2206, Faculty of Economics, University of Cambridge.
    13. Lebeau, Alexis & Petitet, Marie & Quemin, Simon & Saguan, Marcelo, 2024. "Long-term issues with the Energy-Only Market design in the context of deep decarbonization," Energy Economics, Elsevier, vol. 132(C).
    14. Simshauser, P., 2020. "Merchant utilities and boundaries of the firm: vertical integration in energy-only markets," Cambridge Working Papers in Economics 2039, Faculty of Economics, University of Cambridge.
    15. Grimm, Veronika & Rückel, Bastian & Sölch, Christian & Zöttl, Gregor, 2021. "The impact of market design on transmission and generation investment in electricity markets," Energy Economics, Elsevier, vol. 93(C).
    16. 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.
    17. Joachim Bertsch & Simeon Hagspiel & Lisa Just, 2016. "Congestion management in power systems," Journal of Regulatory Economics, Springer, vol. 50(3), pages 290-327, December.
    18. Bertsch, Joachim & Hagspiel, Simeon & Just, Lisa, 2016. "Congestion management in power systems - Long-term modeling framework and large-scale application," EWI Working Papers 2015-3, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
    19. Ruderer, Dominik & Zöttl, Gregor, 2018. "Transmission pricing and investment incentives," Utilities Policy, Elsevier, vol. 55(C), pages 14-30.
    20. Sirin, Selahattin Murat & Camadan, Ercument & Erten, Ibrahim Etem & Zhang, Alex Hongliang, 2023. "Market failure or politics? Understanding the motives behind regulatory actions to address surging electricity prices," Energy Policy, Elsevier, vol. 180(C).

    More about this item

    Keywords

    Renewable Energy Zones; Dynamic Line ratings; Frequency Control Ancillary Services; Variable Renewable Energy;
    All these keywords.

    JEL classification:

    • D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
    • D53 - Microeconomics - - General Equilibrium and Disequilibrium - - - Financial Markets
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General

    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:2362. 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.