Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/205237
Authors: 
Eicke, Anselm
Khanna, Tarun
Hirth, Lion
Year of Publication: 
2019
Abstract: 
The location of new power generation capacity has a significant effect on the need for transmission infrastructure. Newly constructed power plants that are located far from consumption centers increase network losses, investment, and potentially congestion. In addition, lack of public acceptance for transmission extension may increase the relevance of geographical steering of generation investments. The primary objective of this paper is to compare the regulatory instruments that provide locational investment signals. We cluster these instruments into the five groups locational electricity markets, deep grid connection charges, grid usage charges, capacity mechanisms, and renewable energy support schemes. We discuss properties of these instruments and then review their use in twelve major power systems, including a quantitative estimate of their strength. We find that most power systems use multiple instruments in parallel and that there is a lack of consensus regarding how to steer generation capacity. The results also indicate that the efficacy of many instruments is reduced due to a lack of credibility, low levels of transparency, and insufficient spatial and temporal granularity.
Subjects: 
Investment signal
Generators
Network infrastracture
Locational steering
Regulation
Locational electricity market
Grid usage charge
Grid connection charge
Capacity mechanism
Renewable energy support scheme
JEL: 
Q48
Q41
Additional Information: 
Please cite the published version: https://doi.org/10.5547/01956574.41.6.aeic – The accepted manuscript (postprint version) is avaiable here: http://hdl.handle.net/10419/219543
Document Type: 
Working Paper

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