An introduction to transmission network investment in the new market regime

Abstract

Transmission network investment has emerged as a pivotal problem for the electricity industry, as it adapts to the change from traditional to renewable generation, from large scale to distributed generation and from vertically integrated monopolies to vertically separated production stages in various states of competition. Because transmission coordinates the generation, distribution and sales activities and does this partly in competition with emerging smart distribution networks, transmission investment planning is highly complex. The contributions in this volume therefore use economic and engineering approaches to deal with these complexities. Part 1 addresses the fundamental investment issues from the perspective of both disciplines. Part 2 under the heading of merchant investment analyzes the tension between market-based and regulatory approaches to transmission investment. It does so partly with a focus to actual applications, partially based on theoretical models. Part 3 concentrates on the relationship between transmission investment and smart grid developments. Part 4 provides two country-specific examples of the transmission investment problems in different institutional settings. This introductory chapter describes the main contributions of each chapter and draws connections between some of the main emerging themes and the solutions provided by the various authors.