Optimal expansion of the power transmission grid: why not?

Thomas-Olivier Léautier and Véronique Thelen ()
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Thomas-Olivier Léautier: CRM - Centre de Recherche en Management - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - IAE - Institut d'Administration des Entreprises - Toulouse - CNRS - Centre National de la Recherche Scientifique
Véronique Thelen: TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique

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Abstract: While the transmission grid is essential to the operation of well-functioning electric power markets, it appears to be lacking in many regions. This article investigates the causes of this situation, that reviews the main prescriptions of the academic literature, and compares them with experience from sixteen jurisdictions that have restructured their power industry in the last twenty years. We find that vertical separation may be necessary, but is not sufficient to induce grid expansion: a well-designed incentive scheme is also required. When both vertical separation and specific incentives are present, significant congestion reduction is observed.

Date: 2009-10
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Citations: View citations in EconPapers (26)

Published in Journal of Regulatory Economics, 2009, 36 (2), pp.127-153. ⟨10.1007/s11149-008-9086-8⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02402972

DOI: 10.1007/s11149-008-9086-8

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