Optimal Transmission Planning under the Mexican New Electricity Market

Juan Rosellon and Eric Zenón ()
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Eric Zenón: Centro del Cambio Global y la Sustentabilidad en el Sureste, CCGSS

No DTE 598, Working Papers from CIDE, División de Economía

Abstract: This paper addresses electricity transmission planning under the new industry and institutional structure of the Mexican electricity market, which has engaged in a deep reform process after decades of a state-owned vertically-integrated non-competitive closed industry. Under this new structure, characterized by a nodal pricing system and an independent system operator (ISO), we analyze welfare-optimal network expansion with two modeling strategies. In a first model, we propose the use of an incentive price-cap mechanism to promote the expansion of Mexico networks. In a second model, we study centrally-planned grid expansion in Mexico by an ISO within a power-flow model. We carry out comparisons of these models which provide us with hints to evaluate the actual transmission planning process proposed by Mexican authorities (Prodesen). We obtain: 1) the Prodesen plan appears to be a convergent welfare optimal planning process, and 2) incentive regulation in Mexico could further help to implement such an optical process.

Keywords: Electricity market reform; vertical and horizontal disintegration; transmission planning; nodal prices; Mexico. (search for similar items in EconPapers)
JEL-codes: L51 L91 L94 Q40 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2016-04
New Economics Papers: this item is included in nep-ene, nep-ger, nep-ind and nep-reg
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http://www.economiamexicana.cide.edu/RePEc/emc/pdf/DTE/DTE598.pdf (application/pdf)

Related works:
Journal Article: Optimal transmission planning under the Mexican new electricity market (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:emc:wpaper:dte598

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