A New Economic Benefit and Use of System Method for Transmission Expansion Cost Allocation in the Competitive Market Environment

Abstract

The expansion of transmission systems impacts many entities in the market environment. Each entity may fare better or worse as a result of congestion relief in the presence of new facilities. Negatively affected firms apply their authority to prevent the expansion from taking place. The opposition of these firms and the lack of appropriate incentives results in insufficient investments in transmission assets. The network is being frequently used at its maximum limits, leading to economic inadequacies and reduced reliability. Hence, there is a necessity for effective encourage schemes for system expansion. The objective of this paper is to introduce a simple transmission expansion pricing scheme using economic benefit and use of system method, to allocate and price the transmission expansion among the participants. The proposed method can utilize clearly, intelligible and the fairer for transmission expansion cost allocation between the participants at the different uncertainty such as adding the new line, augmenting the new generator and adding the new load to the system. Numerical example using a test power system is presented to illustrate the effectiveness of the studied method

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