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An operational and institutional modular analysis of Transmission and System Operator

Author

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  • Vincent Rious

    (SUPELEC-Campus Gif - Ecole Supérieure d'Electricité - SUPELEC (FRANCE))

Abstract

As far as the management of the power flows on a transmission network is concerned by externality, Transmission and System Operators (TSOs) are externality market designers, and so can be studied thanks to a modular analysis grounded on Wilson [2002], Brunekreeft et al. [2005] and Glachant et al. [2005]. Since TSOs are institutional entities, the design of each module that they implement are constrained by compatibility requirement or "weak institutional complementarity" (Pagano [1993], Aoki [2001]) from their governance structure. The governance structure of TSOs is set by transmission ownership unbundling, governmental energy policy and political economy. Our paper develops such a framework and such an argumentation. Then, although the economic theory specifies a unique arrangement – that we will call "ideal first-best TSO" – to manage efficiently a power transmission network, we can understand why there is such a diversity of TSO arrangements and of heterogeneous results among TSOs. Our comparison between the "ideal first-best TSO" and two reference TSOs, PJM and NGC concludes that some network management schemes may be inefficient compared to an "ideal first-best TSO". But these schemes may be relatively satisfactory regarding the institutional context that frames their design especially as regulation may limit inefficiency

Suggested Citation

  • Vincent Rious, 2006. "An operational and institutional modular analysis of Transmission and System Operator," Post-Print hal-00218135, HAL.
    • Handle: RePEc:hal:journl:hal-00218135
    Note: View the original document on HAL open archive server: https://centralesupelec.hal.science/hal-00218135
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    Cited by:

    1. Michael G. Pollitt, 2011. "Lessons from the History of Independent System Operators in the Energy Sector, with applications to the Water Sector," Working Papers EPRG 1125, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    2. Pollitt, Michael G., 2012. "Lessons from the history of independent system operators in the energy sector," Energy Policy, Elsevier, vol. 47(C), pages 32-48.

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