Do generation firms in restructured electricity markets have incentives to support social-welfare-improving transmission investments?

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dc.contributor.authorSauma, Enzo E.
dc.contributor.authorOren, Shmuel S.
dc.date.accessioned2024-01-10T12:38:24Z
dc.date.available2024-01-10T12:38:24Z
dc.date.issued2009
dc.description.abstractThis 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.
dc.fechaingreso.objetodigital2024-04-16
dc.format.extent14 páginas
dc.fuente.origenWOS
dc.identifier.doi10.1016/j.eneco.2009.01.015
dc.identifier.issn0140-9883
dc.identifier.urihttps://doi.org/10.1016/j.eneco.2009.01.015
dc.identifier.urihttps://repositorio.uc.cl/handle/11534/77039
dc.identifier.wosidWOS:000268923000006
dc.information.autorucIngeniería;Sauma EE;S/I;74184
dc.issue.numero5
dc.language.isoen
dc.nota.accesocontenido parcial
dc.pagina.final689
dc.pagina.inicio676
dc.publisherELSEVIER SCIENCE BV
dc.revistaENERGY ECONOMICS
dc.rightsacceso restringido
dc.subjectTransmission investment incentives
dc.subjectMarket power
dc.subjectFinancial transmission rights
dc.subjectPower systems economics
dc.subjectPOWER
dc.subjectNETWORKS
dc.subjectRIGHTS
dc.subject.ods07 Affordable and Clean Energy
dc.subject.odspa07 Energía asequible y no contaminante
dc.titleDo generation firms in restructured electricity markets have incentives to support social-welfare-improving transmission investments?
dc.typeartículo
dc.volumen31
sipa.codpersvinculados74184
sipa.indexWOS
sipa.indexScopus
sipa.trazabilidadCarga SIPA;09-01-2024
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