Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/181036 
Year of Publication: 
2015
Citation: 
[Journal:] Energy Journal [ISSN:] 0195-6574 [Volume:] 36 [Issue:] 4 [Publisher:] International Association for Energy Economics [Place:] Cleveland [Year:] 2015 [Pages:] 105-128
Publisher: 
International Association for Energy Economics, Cleveland
Abstract: 
We analyze various regulatory regimes for electricity transmission investment in the context of a power system transformation toward renewable energy. Distinctive developments of the generation mix are studied, assuming that a shift toward renewables may have temporary or permanent impacts on network congestion. We specifically analyze the relative performance of a combined merchant-regulatory price-cap mechanism, a cost-based rule, and a non-regulated approach in dynamic generation settings. We find that incentive regulation may perform better than cost-based regulation but only when appropriate weights are used. While quasi-ideal weights generally restore the beneficial properties that incentive regulatory mechanisms are well-known for, pure Laspeyres weights may either lead to over-investment or delayed investments as compared to the welfare-optimum benchmark. Laspeyres-Paasche weights, in turn, seem appropriate under permanently or temporarily increased network congestion. Thus, our analysis provides motivation for further research in order to characterize optimal regulation for transmission expansion in the context of renewable integration.
Subjects: 
Electricity transmission
Incentive regulation
Renewable integration
Laspeyres-Paasche weights
Ideal weights
JEL: 
Q40
Q42
L51
Published Version’s DOI: 
Additional Information: 
This is the postprint of an article published in Energy Journal 36 (2015), 4, p. 105-128, available online at: http://dx.doi.org/10.5547/01956574.36.4.jege
Document Type: 
Article
Document Version: 
Accepted Manuscript (Postprint)

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.