Vincent Rious

Power Transmission Network Investment as an Anticipation Problem

Power generation and transmission are complementary activities that must be coordinated to ensure an optimal use and development of the transmission network. This coordination is today more difficult in a liberalized system, because of unbundling and the freedom for investors to choose their generation technologies (Joskow, 2006). Shorter investment time between generation and network create uncertainty for the network planning and congestions. In the economic literature, the efficiency of anticipating generation investment has been under-evaluated assuming that it is a cost free activity. Our model evaluates the effect of anticipation costs and defines in which cases the previous results by Sauma and Oren (2006, 2007) could still hold.

Assessing available transfer capacity on a realistic European Network: Impact of assumptions on wind power generation

This paper aims at assessing the impact of massive wind power penetration on the calculation of ATC. Calculations are made for the ATC between France and Belgium and are realized on a realistic European Electricity Network. We find that the German wind power production make this ATC vary depending on the total wind power production and its geographical distribution in Germany. Wind power production and the nodes involved in cross-border exchange must then be forecast precisely so that the cross-border exchange can be maximal without breaching network security.

Anticipation for efficient electricity transmission network investments

This paper proposes a model and preliminary results to evaluate the efficiency of anticipating the connection of power plants with shorter construction duration than the time needed to obtain the right to upgrade the network and finally to do this reinforcement. This evaluation is made in presence of a cost of anticipation related to the study of the project of network investment and to the administrative procedures needed to obtain the building agreement. This model compares a proactive TSO that anticipates the connection of new generators and then the required network reinforcement, with a reactive one that does not make any anticipation but that may then face greater congestion while the network is being reinforced. The efficiency of these behaviors is measured in terms of social cost. We find out that there exists a limit of probability for the connection of generators beyond which a proactive TSO is more efficient than a reactive one. Evaluated on a realistic case of connection, this limit of probability is found quite low, which indicates that the proactive behavior for a TSO shall generally be the optimal one.

Regimes for granting the right to use hydropower in Europe

Over the last decade, the European Commission has launched several procedures concerning the compatibility of hydropower right granting with European laws and regulations in several countries (e.g. France, Spain, Italy, Portugal, etc.). Meanwhile, other hydropower regimes (e.g. in Austria or Sweden) are not subject of such investigations despite not being grounded on competitive process. This difference of treatment raises questions about the drivers of the European Commission actions. Understanding and grabbing the main differences between the national hydropower regimes is then of particular interest. This report aims at providing a benchmarking of hydropower concession regimes in Europe, describing hydropower regimes in 14 European countries (Austria, Bulgaria, Finland, France, Germany, Great-Britain, Greece, Italy, Norway, Poland, Portugal, Spain, Sweden and Switzerland) and regions when appropriate (e.g. cantons in Switzerland or Lands/States in Germany). This report describes and scrutinizes hydropower regimes through a unified analysis framework to ensure their comparison on an equal basis. This framework is structured around 4 blocks: 1. The institutional framework of hydropower regimes (e.g. type of rights to use hydropower, authorities granting rights to use hydropower, etc.) 2. The framework for granting right to use hydropower (duration of rights and procedure, competitive process and existence of a possible EC infringement procedure). 3. The obligations of the hydropower operator (environmental and investment obligations and royalties). 4. Small hydro characterisation and support schemes. ISBN:978-92-9084-353-5 doi:10.2870/121640

Integration of renewable energy in the European power grid: Market mechanism for congestion management

With the increased use of wind energy several Transmission System Operators (TSO) have increasing difficulties for congestion forecasting due to the unpredictable nature of the energy source. To maintain the state of the system within acceptable and secure operating conditions, the TSOs require the curtailment of the production of generators to avoid local congestion on the power grid. These actions reduce the revenue of renewable producers and limit the development of green energy. This is because renewable producers with support schemes bear the inherent cost of congestion when they are re-dispatched. This paper proposes two types of market mechanism that solve the above mentioned problems in case of local congestion. The first mechanism consists in a compensation between renewable producers to limit the amount of redispatched generation in situations when the local congested power grid incorporates only renewable production. If both renewable and conventional productions are connected close to each other, a second mechanism will be used to incentivize competition among power adjustment offers.

How compatible is perfect competition with transmission loss allocation methods

This paper addresses the problem of transmission loss allocation in a power system where the generators, the demands and the system operator are independent. We suppose that the transmission losses are exclusively charged to the generators, which are willing to adopt a perfectly competitive behavior. In this context, their offers must reflect their production costs and their transmission loss costs, the latter being unknown beforehand and having to be predicted. We assume in this paper that the generators predict their loss costs from the past observations by using a weighted average of their past allocated costs. Under those assumptions, we simulate the market dynamics for different types of transmission loss allocation methods. The results show that the transmission loss allocation scheme can lead to a poorly efficient market in terms of social welfare.

A contribution in experimental economics to classify market power behaviors in an oligopolistic power market

The approach of experimental economics is used in this paper to show that other behaviors than perfect competition and classical representations of imperfect competition can be relevant to study a power market on a constrained network. Human subjects compete on a market to maximize their profit while they are located in two different geographical areas with limited interconnector capacity. The eight experiments we run lead to a better understanding of how market power is exercised by the duopoly or the triopoly, how it can influence an adjacent competitive market and a characterisation of subjectspsila behaviour. We find out that subjectspsila behaviours can be classified into three main classes: leaders, who take risk to raise prices, followers who bid according to their expectation of leaderspsila decision, and price takers who bid their marginal price whatever the market conditions. The presence of one leader and several followers is usually sufficient to observe significant use of market power.

Considering power plants mothballing in long-term simulation models for liberalized power markets

This paper proposes a methodology for modeling mothballing decisions in order to better study the different strategies adopted by power plants owners and their impact on power systems (in particular generation adequacy). A system dynamic approach is adopted to build a model which represents investment, mothballing and shutdown decisions in an energy-only market. The results obtained with the proposed modelling methodology highlight the importance of considering mothballing in long term simulation models of power markets. They show how models which neglect mothballing decisions might overestimate or underestimated the level of available capacity, therefore leading to inappropriate policy choices. The proposed methodology could better inform policymakers on their decisions.

Review of models for power exchanges with non-convex technical constraints for investment decisions

To study investment incentives sent by energy prices in European power exchanges in the context of high renewable injections, it is necessary to model precisely the functioning of the short-term market. In particular, the possible impacts of non-convex technical constraints on prices should be considered as they may deeply impact investment decisions. In this article, four different models are compared based on two criteria, the complexity and the relevance to represent the functioning of a power exchange when technical constraints are considered. A trade-off between these two criteria is needed and no model seems to meet successfully both. As a result, an intermediate model like a convex Unit Commitment model or a decentralized model with simple bids appears to be a wise solution to study the investment decisions.

For a harmonisation of hydropower regimes in European Single Market

• Over the last decade, the European Commission has opened several infringement procedures to prompt the implementation of competitive processes, but they have not been undertaken with a “Europeanised” approach, which would ensure a similarity of efforts throughout Member States to open competition to access hydropower. The current diversity amongst Member States creates obstacles for the countries that have engaged in a competitive renewal process, as they are faced with the lack of a level playing field and a coherent reference framework.