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The value of network investment coordination to reduce environmental externalities when integrating renewables: Case on the Chilean transmission network

Carlos Matamala, Rodrigo Moreno and Enzo Sauma

Energy Policy, 2019, vol. 126, issue C, 251-263

Abstract: The need to decarbonize the power sector through increased participation of renewable generation has originated an escalating necessity for transmission network investments that can be undertaken by a number of market participants, including planning authorities/system operators, network companies and project developers. The expansion of the power network, however, presents various environmental and social conflicts, in particular, with land uses that are valuable by society such as the presence of communities, national parks, protected forests, tourism zones, archaeological sites, etc. In this context of environmental and social awareness, we assess the benefits of two strategies that coordinate network investments among various participants and compare them against the current counterfactual approach, where no coordination is undertaken and thus renewable generation projects are connected to the main transmission system in an individual, project-by-project basis. Through various case studies based on the main Chilean transmission system, we show that the lack of coordination in network investments may present severe impacts in terms of the socio-environmental externalities of transmission network expansions. Furthermore, we demonstrate that attempting to reduce externalities of new network investments without proper coordination of new developments may significantly limit the success of a land use policy associated with network developments.

Keywords: Transmission investment; Investment coordination; Environmental externalities; Power system economics (search for similar items in EconPapers)
Date: 2019
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Handle: RePEc:eee:enepol:v:126:y:2019:i:c:p:251-263