Is combination of nodal pricing and average participation tariff the best solution to coordinate the location of power plants with lumpy transmission investments?
Vincent Rious,
Yannick Perez () and
Philippe Dessante ()
Additional contact information
Vincent Rious: SUPELEC-Campus Gif - Ecole Supérieure d'Electricité - SUPELEC (FRANCE)
Philippe Dessante: SUPELEC-Campus Gif - Ecole Supérieure d'Electricité - SUPELEC (FRANCE)
Post-Print from HAL
Abstract:
This paper evaluates the opportunity and efficiency to introduce a two-part tariff to coordinate the location of power plants with lumpy transmission investments. Nodal pricing sends the short run component of such a two-part tariff and we study the case where the average participation tariff sends the long run one. We argue that this solution is helpful because the average participation tariff tackles lumpiness of transmission capacity while being as cost-reflective as possible. Our proposition is evaluated based on a double optimization model where a TSO minimizes the transmission cost while a generator minimizes its own cost that may take into account network constraints and include the average participation tariff. Numerical simulations are performed on a two-node network evolving during twenty years with increasing demand. The joint implementation of nodal pricing and the average participation tariff stays the best combination to coordinate as efficiently as possible the generation and transmission investments, although the optimal set of generation and transmission investments may not be reached because of transmission lumpiness. The simulations show also that implementing locational network tariffs is prioritary over implementing nodal pricing to coordinate more efficiently the location of generation with lumpy transmission investment. In the considered examples, the average participation tariff allows a more efficient location of generation even when the congestion management scheme being redispatch sends no short run locational signal.
Keywords: Generation investment; Lumpy transmission investment; Long run coordination; Locational signals; Efficiency evaluation (search for similar items in EconPapers)
Date: 2008-06-20
Note: View the original document on HAL open archive server: https://centralesupelec.hal.science/hal-00323878
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)
Published in The Economics of Energy Market, Jun 2008, Toulouse, France. 23 p
Downloads: (external link)
https://centralesupelec.hal.science/hal-00323878/document (application/pdf)
Related works:
Working Paper: Is combination of nodal pricing and average participation tariff the best solution to coordinate the location of power plants with lumpy transmission investments? (2009) 
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00323878
Access Statistics for this paper
More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().