Measuring the competitiveness benefits of a transmission investment policy: The case of the Alberta electricity market |
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| Affiliation: | 1. Department of Electrical & Computer Engineering, Tarbiat Modares University, Tehran, Iran;2. Department of Electrical & Computer Engineering, Tarbiat Modares University, P.O. Box: 14115-111, Tehran, Iran;1. Department of Renewable Energies and Environment, Faculty of New Sciences & Technologies, University of Tehran, Tehran, Iran;2. Electrical Engineering Department, College of Engineering at Wadi Aldawasir, Prince Sattam Bin Abdulaziz University, Saudi Arabia;3. Department of Health, Safety, and Environment, School of Public Health and Safety, Shahid Beheshti University of Medical Sciences, Tehran, Iran;1. Department of Asian and Policy Studies, Hong Kong Institute of Education, Hong Kong;2. Energy and Environmental Economics, Inc. (E3), 101 Montgomery Street, Suite 1600, San Francisco, CA 94104, USA;3. Independent SAS Analyst, Flat H, 16/F, Block 3, Wing Fai Centre, Fanling, N.T., Hong Kong;4. Sacramento Municipal Utilities District, 6301 S Street, Sacramento, CA 95817, USA;5. Frontier Associates LLC, 1515 S. Capital of Texas Highway, Suite 110, Austin, TX 78746, USA;1. Unit of Energy Engineering, Faculty of Engineering Sciences, Ben-Gurion University of the Negev, Beer-Sheva 84105, Israel;2. Department of Public Policy & Administration, Guilford Glazer Faculty of Business and Management, Ben-Gurion University of the Negev, P.O. Box 653, Beer-Sheva 84105, Israel |
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| Abstract: | Transmission expansions can increase the extent of competition faced by wholesale electricity suppliers with the ability to exercise unilateral market power. This can cause them to submit offer curves closer to their marginal cost curves, which sets market-clearing prices closer to competitive benchmark price levels. These lower wholesale market-clearing prices are the competitiveness benefit consumers realize from the transmission expansion. This paper quantifies empirically the competitiveness benefits of a transmission expansion policy that causes strategic suppliers to expect no transmission congestion. Using hourly generation-unit level offer, output, market-clearing price and congestion data from the Alberta wholesale electricity market from January 1, 2009 to July 31, 2013, an upper and lower bound on the hourly consumer competitiveness benefits of this transmission policy is computed. Both of these competitiveness benefits measures are economically significant, which argues for including them in transmission planning processes for wholesale electricity markets to ensure that all transmission expansions with positive net benefits to electricity consumers are undertaken. |
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| Keywords: | Wholesale Electricity Markets Valuing Transmission Expansions Competitiveness Benefits Alberta Electricity System Operator |
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