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Power Transmission Network Investment as an Anticipation Problem

Author

Listed:
  • Vincent Rious

    (E3S - Supélec Sciences des Systèmes - Ecole Supérieure d'Electricité - SUPELEC (FRANCE))

  • Yannick Perez

    (UP11 - Université Paris-Sud - Paris 11)

  • Jean-Michel Glachant

    (ADIS - Analyse des Dynamiques Industrielles et Sociales - UP11 - Université Paris-Sud - Paris 11 - Département d'Economie)

Abstract

Power generation and transmission are complementary activities that must be coordinated to ensure an optimal use and development of the transmission network. This coordination is today more difficult in a liberalized system, because of unbundling and the freedom for investors to choose their generation technologies (Joskow, 2006). Shorter investment time between generation and network create uncertainty for the network planning and congestions. In the economic literature, the efficiency of anticipating generation investment has been under-evaluated assuming that it is a cost free activity. Our model evaluates the effect of anticipation costs and defines in which cases the previous results by Sauma and Oren (2006, 2007) could still hold.

Suggested Citation

  • Vincent Rious & Yannick Perez & Jean-Michel Glachant, 2011. "Power Transmission Network Investment as an Anticipation Problem," Post-Print hal-01424616, HAL.
    • Handle: RePEc:hal:journl:hal-01424616
    DOI: 10.2202/1446-9022.1284
    Note: View the original document on HAL open archive server: https://hal.science/hal-01424616
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    References listed on IDEAS

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    1. Vincent Rious & Jean-Michel Glachant & Yannick Perez & Philippe Dessante, 2009. "L'insuffisance des signaux de localisation pour la coordination entre la production et le transport d'électricité dans les systèmes électriques libéralisés," Revue économique, Presses de Sciences-Po, vol. 60(3), pages 819-829.
    2. Joskow Paul L., 2008. "Incentive Regulation and Its Application to Electricity Networks," Review of Network Economics, De Gruyter, vol. 7(4), pages 1-14, December.
    3. Hogan, William W, 1992. "Contract Networks for Electric Power Transmission," Journal of Regulatory Economics, Springer, vol. 4(3), pages 211-242, September.
    4. Vincent Rious & Yannick Perez & Philippe Dessante, 2008. "Is combination of nodal pricing and average participation tariff the best solution to coordinate the location of power plants with lumpy transmission investments?," Post-Print hal-00323878, HAL.
    5. Roques, Fabien A. & Newbery, David M. & Nuttall, William J., 2008. "Fuel mix diversification incentives in liberalized electricity markets: A Mean-Variance Portfolio theory approach," Energy Economics, Elsevier, vol. 30(4), pages 1831-1849, July.
    6. 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.
    7. Finon, Dominique & Perez, Yannick, 2007. "The social efficiency of instruments of promotion of renewable energies: A transaction-cost perspective," Ecological Economics, Elsevier, vol. 62(1), pages 77-92, April.
    8. Brennan Timothy J., 2009. "Network Effects in Infrastructure Regulation: Principles and Paradoxes," Review of Network Economics, De Gruyter, vol. 8(4), pages 1-23, December.
    9. McLaren Loring, Joyce, 2007. "Wind energy planning in England, Wales and Denmark: Factors influencing project success," Energy Policy, Elsevier, vol. 35(4), pages 2648-2660, April.
    10. 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.
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    Cited by:

    1. J-M- Glachant & H. Khalfallah & Y. Perez & V. Rious & M. Saguan, 2013. "Implementing Incentive Regulation and Regulatory Alignment with Resource Bounded Regulators," Competition and Regulation in Network Industries, Intersentia, vol. 14(3), pages 265-291, September.
    2. Höffler, Felix & Wambach, Achim, 2013. "Investment Coordination in Network Industries: The Case of Electricity Grid and Electricity," EWI Working Papers 2013-12, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
    3. Block, Lukas, 2023. "Network formation with NIMBY constraints," Energy Economics, Elsevier, vol. 119(C).
    4. Mastropietro, Paolo & Barroso, Luiz A. & Batlle, Carlos, 2015. "Power transmission regulation in a liberalised context: An analysis of innovative solutions in South American markets," Utilities Policy, Elsevier, vol. 33(C), pages 1-9.
    5. Jean-Michel Glachant & Haikel Khalfallah & Yannick Perez & Vincent Rious & Marcelo Saguan, 2013. "Implementing incentive regulation through an alignment with resource bounded regulators," Post-Print halshs-00767872, HAL.
    6. Miguel Vazquez & Michelle Hallack, 2013. "Interaction between gas and electricity market-based trading in the short run," RSCAS Working Papers 2013/42, European University Institute.
    7. Felix Höffler & Achim Wambach, 2013. "Investment coordination in network industries: the case of electricity grid and electricity generation," Journal of Regulatory Economics, Springer, vol. 44(3), pages 287-307, December.
    8. Groppi, Angelamaria & Fumagalli, Elena, 2014. "Network expansion by a proactive transmission system operator: A case study," Energy Policy, Elsevier, vol. 69(C), pages 610-623.

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