Merchant Electricity Transmission Expansion: A European Case Study

Tarjei Kristiansen and Juan Rosellon

No 1028, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: We apply a merchant transmission model to the trilateral market coupling (TLC) arrangement among the Netherlands, Belgium and France as a generic example, and note that it can be applied to any general market splitting or coupling of Europe's different national power markets. In this merchant framework; the system operator allocates financial transmission rights (FTRs) to investors in transmission expansion based upon their preferences, and revenue adequacy. The independent system operator (ISO) preserves some proxy FTRs to deal with potential negative externalities due to an expansion project. This scheme proves to be capable in providing incentives for investment in transmission expansion projects within TLC areas.

Keywords: transmission expansion; trilateral market coupling; Europe; financial transmission rights; congestion management (search for similar items in EconPapers)
JEL-codes: L51 L91 L94 Q40 (search for similar items in EconPapers)
Pages: 22 p.
Date: 2010
New Economics Papers: this item is included in nep-ene, nep-eur, nep-ppm and nep-reg
References: View complete reference list from CitEc
Citations: View citations in EconPapers (21)

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Related works:
Journal Article: Merchant electricity transmission expansion: A European case study (2010)
Working Paper: Merchant Electricity Transmission Expansion: A European Case Study (2007)
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