Effects of Transmission Congestion on Different Incentive Policies for Renewable Energy
Publication: Journal of Energy Engineering
Volume 143, Issue 1
Abstract
This paper analyzes the effects of relieving power transmission congestion to encourage the development of renewable energy (RE) under different regulatory policies. The present model is based on Cournot competition and incorporates uncertainty and the variability of both renewable resources and demand. Transmission congestion particularly affects the development of RE under subsidy policies (feed-in tariff and premium payment). By investing in flexible AC transmission system (FACTS) and/or other devices that increase transmission capacity, all policies have positive incentives from the social perspective. From a private perspective, the tax policy does not provide sufficient incentives. Higher levels of transmission investment are obtained from a social perspective than from a private perspective. Finally, the existence of multiple equilibria affects the resulting social welfare and market outcomes. In particular, emissions and social welfare may significantly vary from equilibrium to equilibrium.
Get full access to this article
View all available purchase options and get full access to this article.
Acknowledgments
The research reported in this paper was partially supported by the CONICYT, FONDECYT/Regular 1130781 grant. A CONICYT doctoral scholarship and a supplementary scholarship from the College of Engineering at the Pontificia Universidad Católica de Chile (PUC) partially supported to Miguel Pérez de Arce.
References
Acharya, N., and Mithulananthan, N. (2007). “Influence of TCSC on congestion and spot price in electricity market with bilateral contract.” Electric Power Syst. Res., 77(8), 1010–1018.
Amor, M., Villemeur, E., Pellat, M., and Pineau, P. O. (2014). “Influence of wind power on hourly electricity prices and GHG (greenhouse gas) emissions: Evidence that congestion matters from Ontario zonal data.” Energy, 66, 458–469.
Byrnes, L., Brown, C., Foster, J., and Wagner, L. (2013). “Australian renewable energy policy: Barriers and challenges.” Renewab. Energy, 60(1), 711–721.
Contreras, J., Klusch, M., and Krawczyk, J. B. (2004). “Numerical solutions to Nash-Cournot equilibria in coupled constraint electricity markets.” IEEE Trans. Power Syst., 19(1), 195–206.
Duong, T., JianGang, Y., and Truong, V. (2013). “A new method for secured optimal power flow under normal and network contingencies via optimal location of TCSC.” Electr. Power Energy Syst., 52, 68–80.
Felder, F. A. (2011). “Examining electricity price suppression due to renewable resources and other grid investments.” Electr. J., 24(4), 34–46.
Fürsch, M., Hagspiel, S., Jägemann, C., Nagl, S., Lindenberger, D., and Tröster, E. (2013). “The role of grid extensions in a cost-efficient transformation of the European electricity system until 2050.” Appl. Energy, 104, 642–652.
Hingorani, N., and Gyugyi, L. (1999). Understanding FACTS: Concepts and technology of flexible AC transmission systems, IEEE, New York.
Jacobsen, H., Pade, L., Schröder, S., and Kitzing, L. (2014). “Cooperation mechanisms to achieve EU renewable targets.” Renewab. Energy, 63, 345–352.
Joskow, P., and Tirole, J. (2005). “Merchant transmission investment.” J. Ind. Econ., 53(2), 233–264.
Kahn, E. (2010). “Wind integration studies: Optimization vs simulation.” Electr. J., 23(9), 51–64.
Klemperer, P., and Meyer, M. (1989). “Supply function equilibria in oligopoly under uncertainty.” Econometrica, 57(6), 1243–1277.
Krawczyk, J., and Uryasev, S. (2000). “Relaxation algorithms to find Nash equilibria with economic applications.” Environ. Modell. Assess., 5(1), 63–73.
Krawczyk, J., and Zuccollo, J. (2006). “NIRA-3: An improved MATLAB package for finding Nash equilibria in infinite games.” 〈http://mpra.ub.uni-muenchen.de/id/eprint/1119〉 (Jan. 21, 2013).
Limpaitoon, T., Chen, Y., and Oren, S. (2011). “The impact of carbon cap and trade regulation on congested electricity market equilibrium.” J. Regul. Econ., 40(3), 237–260.
Martin, N., and Rice, J. (2012). “Developing renewable energy supply in Queensland, Australia: A study of the barriers, targets, policies and actions.” Renewab. Energy, 44, 119–127.
MATLAB [Computer software]. MathWorks, Natick, MA.
Mills, A., Phadke, A., and Wiser, R. (2011). “Exploration of resource and transmission expansion decisions in the western renewable energy zone initiative.” Energy Policy, 39(3), 1732–1745.
Mithulananthan, N., and Acharya, N. (2007). “A proposal for investment recovery of FACTS devices in deregulated electricity markets.” Electr. Power Syst. Res., 77(5-6), 695–703.
Morales, J. M., Pinson, P., and Madsen, H. (2012). “A transmission-cost-based model to estimate the amount of market-integrable wind resources.” IEEE Trans. Power Syst., 27(2), 1060–1069.
Munoz, F., Sauma, E., and Hobbs, B. (2013). “Approximations in power transmission planning: Implications for the cost and performance of renewable portfolio standards.” J. Regul. Econ., 43(3), 305–338.
Muñoz, C., Sauma, E., Contreras, J., Aguado, J., and de la Torre, S. (2012). “Impact of high wind power penetration on transmission network expansion planning.” IET Gener. Transm. Distrib., 6(12), 1281–1291.
Nabavia, S. M. H., Kazemia, A., and Masoumb, M. A. S. (2012). “Social welfare maximization with fuzzy based genetic algorithm by TCSC and SSSC in double-sided auction market.” Scientia Iranica, 19(3), 745–758.
Olson, A., Orans, R., Allen, D., Moore, J., and Woo, C. K. (2009). “Renewable portfolio standards, greenhouse gas reduction, and long-line transmission investments in the WECC.” Electr. J., 22(9), 38–46.
Pérez de Arce, M., and Sauma, E. (2016). “Comparison of incentive policies for renewable energy in an oligopolistic market with price-responsive demand.” Energy J., 37(3), 159–198.
Pozo, D., Contreras, J., and Sauma, E. (2013a). “If you build it, he will come: Anticipative power transmission planning.” Energy Econ., 36, 135–146.
Pozo, D., Sauma, E., and Contreras, J. (2013b). “A three-level static MILP model for generation and transmission expansion planning.” IEEE Trans. Power Syst., 28(1), 202–210.
Rodríguez, R., Becker, S., Andresen, G., Heide, D., and Greiner, M. (2014). “Transmission needs across a fully renewable European power system.” Renewab. Energy, 63, 467–476.
Saguan, M., and Meeus, L. (2014). “Impact of the regulatory framework for transmission investments on the cost of renewable energy in the EU.” Energy Econ., 43, 185–194.
Sauma, E., and Oren, S. (2006). “Proactive planning and valuation of transmission investments in restructured electricity markets.” J. Regul. Econ., 30(3), 261–290.
Sauma, E., and Oren, S. (2007). “Economic criteria for planning transmission investments in restructured electricity markets.” IEEE Trans. Power Syst., 22(4), 1394–1405.
Sauma, E., Pérez de Arce, M., and Contreras, J. (2015). “Multiple equilibria in oligopolistic power markets with feed-in tariff incentives for renewable energy generation.” Proc., 48th Annual Hawaii Int. Conf. on System Sciences, IEEE, New York.
Schaber, K., Steinke, F., and Hamacher, T. (2012a). “Transmission grid extensions for the integration of variable renewable energies in Europe: Who benefits where?” Energy Policy, 43, 123–135.
Schaber, K., Steinke, F., Mühlich, P., and Hamacher, T. (2012b). “Parametric study of variable renewable energy integration in Europe: Advantages and costs of transmission grid extensions.” Energy Policy, 42, 498–508.
Schroeder, A., Oei, P. Y., Sander, A., Hankel, L., and Laurisch, L. Ch. (2013). “The integration of renewable energies into the German transmission grid—A scenario comparison.” Energy Policy, 61, 140–150.
Schumacher, A., Fink, S., Porter, K. (2009). “Moving beyond paralysis: How states and regions are creating innovative transmission policies for renewable energy projects.” Electr. J., 22(7), 27–36.
Transelec. (2009). “Declaración de Impacto Ambiental del Proyecto Instalación de Equipos de Compensación de Energía Eléctrica en Subestaciones Cerro Navia y Polpaico.” 〈https://www.e-seia.cl/archivos/2e7_DIAversion_final.pdf〉 (Jan. 29, 2014).
U.S. EIA (U.S. Energy Information Administration). (2013). “International energy outlook 2013.” 〈http://www.eia.gov/forecasts/ieo/pdf/0484(2013).pdf〉 (Apr. 7, 2014).
Wilson, R. (2002). “Architecture of power markets.” Econometrica, 70(4), 1299–1340.
Wright, G. (2012). “Facilitating efficient augmentation of transmission networks to connect renewable energy generation: The Australian experience.” Energy Policy, 44, 79–91.
Yang, H., and Zhang, Y. (2009). “Complex dynamics analysis for Cournot game with bounded rationality in power market.” Int. J. Elect. Power Energy Syst., 1(1), 48–60.
Yousefi, A., Nguyen, T., Zareipour, H., and Malik, O. (2012). “Congestion management using demand response and FACTS devices.” Electr. Power Energy Syst., 37(1), 78–85.
Information & Authors
Information
Published In
Journal of Energy Engineering
Volume 143 • Issue 1 • February 2017
Copyright
© 2016 American Society of Civil Engineers.
History
Received: Mar 3, 2015
Accepted: Jan 29, 2016
Published online: Apr 25, 2016
Discussion open until: Sep 25, 2016
Published in print: Feb 1, 2017
Authors
Metrics & Citations
Metrics
Citations
Download citation
If you have the appropriate software installed, you can download article citation data to the citation manager of your choice. Simply select your manager software from the list below and click Download.