Rosellon, Juan and Weigt, Hannes (2008): A Dynamic Incentive Mechanism for Transmission Expansion in Electricity Networks – Theory, Modeling and Application.
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This paper examines the Hogan-Rosellón-Vogelsang (2007) (HRV) incentive mechanism for transmission expansion, and tests it for different network topologies. This new mechanism is based upon redefining transmission output in terms of point-to-point transactions or financial transmission rights (FTRs) and applies Vogelsang’s (2001) incentive-regulation logic that proposes rebalancing the variable and fixed parts of a two-part tariff to promote efficient, long-term expansion. We analyze three main topics: first, the behavior of cost functions for distinct network topologies; second, the HRV regulatory approach (incorporated into an MPEC Problem and tested for a three-node network), and third an application to a simplified network. The results suggest that the mechanism is generally suited as an incentive tool for network extensions.
|Item Type:||MPRA Paper|
|Original Title:||A Dynamic Incentive Mechanism for Transmission Expansion in Electricity Networks – Theory, Modeling and Application|
|Keywords:||Electricity transmission expansion, incentive regulation, merchant investment,congestion management,Europe|
|Subjects:||L - Industrial Organization > L5 - Regulation and Industrial Policy > L51 - Economics of Regulation
L - Industrial Organization > L9 - Industry Studies: Transportation and Utilities > L91 - Transportation: General
L - Industrial Organization > L9 - Industry Studies: Transportation and Utilities > L94 - Electric Utilities
Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q4 - Energy > Q40 - General
|Depositing User:||Juan Rosellon|
|Date Deposited:||21. May 2010 19:26|
|Last Modified:||12. Feb 2013 20:45|
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