Browsing by Author "Oren, Shmuel S."

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    Do generation firms in restructured electricity markets have incentives to support social-welfare-improving transmission investments?
    (ELSEVIER SCIENCE BV, 2009) Sauma, Enzo E.; Oren, Shmuel S.
    This paper examines the incentives that generation firms have in restructured electricity markets for supporting long-term transmission investments. In particular, we study whether generation firms, which arguably play a dominant role in the restructured electricity markets, have the incentives to fund or support incremental social-welfare-improving transmission investments. We examine this question in a two-node network and explore how such incentives are affected by the ownership of financial transmission rights (FTRs) by generation firms. In the analyzed two-node network, we show both (i) that the net exporter generation firm has the correct incentives to increase the transmission capacity incrementally up to a certain level and (ii) that, although a policy that allocates FTRs to the net exporter generation firm can be desirable from a social point of view, such a policy would dilute the net-importer-generation-firm's incentives to support transmission expansion. Moreover, if all FTRs were allocated or auctioned off to the net exporter generation firm, then it is possible to increase both consumer surplus and social welfare while keeping the net exporter generation firm revenue neutral. (C) 2009 Elsevier B.V. All rights reserved.
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    Economic criteria for planning transmission investment in restructured electricity markets
    (IEEE-INST ELECTRICAL ELECTRONICS ENGINEERS INC, 2007) Sauma, Enzo E.; Oren, Shmuel S.
    From an economic perspective, a common criterion for assessing the merits of a transmission investment is its impacts on social welfare. The underlying assumption in using this criterion is that side payments may be used to distribute the social gains among all market players. In reality, however, since the impacts of an electricity transmission project on different players may vary, such side payments are rather difficult to implement.
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    Proactive transmission investment in competitive power systems
    (IEEE, 2006) Sauma, Enzo E.; Oren, Shmuel S.
    We formulate a three-period model for studying how the exercise of local market power by generation firms affects the equilibrium investment between the generation and the transmission sectors. Using a 30-bus network example, we compare the transmission investment decisions made by a "proactive" network planner (who proactively plans transmission investments to induce a more socia By -efficient equilibrium of generation investments) with both those made by an integrated-resources planner (who jointly plans generation and transmission expansions) and those made by a "reactive' network planner (who plans transmission investments only considering the currently installed generation capacities). We show that, although a proactive network planner cannot do better (in terms of social welfare) than an integrated -resources planner, it can recoup some of the lost welfare due to the separation of generation and transmission planning by proactively expanding transmission capacity. Conversely, a reactive network planner, who ignores the interrelationship between the transmission and the generation investments, foregoes this opportunity.