Transmission Investment in the Peruvian Electricity Market: Theory and Applications
29 Pages Posted: 17 Nov 2011
Date Written: November 1, 2011
Abstract
This research presents an application of the Hogan, Rosellón and Vogelsang (2010) (HRV) mechanism to promote electricity transmission network expansion in the Peruvian electricity transmission system known as SEIN (Sistema Eléctrico Interconectado Nacional). The HRV mechanism combines the merchant and regulatory approaches to promote investment into transmission grids. This mechanism gives incentives for efficient investment in expansion of the network by the rebalancing over time of the fixed and variable charges of a two-part tariff in the framework of a wholesale electricity market with locational pricing. The expansion of the network is carried out through the sale of Financial Transmission Rights (FTR's) for the congested lines. The mechanism is applied for 103 nodes of the SEIN using detailed characteristics of generators, nodes and transmission lines. Under Laspeyres weights and linear cost of expansion of transmission capacity, it is shown that prices converge to lower levels as a result of increased transmission capacity.
Keywords: Electricity transmission expansion, incentive regulation, Peru, congestion management
JEL Classification: L51, L91, L94, Q40
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
On the Efficiency of Competitive Electricity Markets with Time-Invariant Retail Prices
-
Markets for Power in the United States: An Interim Assessment
-
Retail Electricity Competition
By Paul L. Joskow and Jean Tirole
-
Retail Electricity Competition
By Paul L. Joskow and Jean Tirole
-
Reliability and Competitive Electricity Markets
By Paul L. Joskow and Jean Tirole
-
Reliability and Competitive Electricity Markets
By Paul L. Joskow and Jean Tirole
-
Reliability and Competitive Electricity Markets
By Paul L. Joskow and Jean Tirole
-
Competitive Electricity Markets and Investment in New Generating Capacity
-
Merchant Transmission Investment
By Paul L. Joskow and Jean Tirole