Investment Mode And Fixed Cost Allocation For Transmission

Transmission deregulation is one of the most important and complicated sectors in the process of structuring electricity markets. However, a series of blackout in Europe and America cause a wide attention to the reinforcing of transmission networks. The reorganization of electric industries makes the transmission network weaker than ever. It is now more difficult than ever to ignore the fact that the reliability is at stake, transmission restructure cannot be left in a state of limbo. So how to make reasonable policies to promote the transmission investment is the most important problem to solve in each country. Furthermore, the transmission cost accounts alone with the independence of transmission owners. The allocation and pricing of large transmission cost must alleviate the financing pressure on governments. Based on electric circuit theorems, economics and cooperative game theory, some issues regarding the transmission investment are studied theoretically and some methodologies are given for the purpose of transmission investment.Transmission investment can be divided into three categories: object-oriented transmission investment, deregulated transmission investment and merchant transmission investment. The transmission investment in different countries may be different. This paper makes it clear to understand the transmission investment problem from a theoretical and empirical point of view. The background and characteristic of merchant investment are analyzed. Some advices for the reformation of transmission investment are proposed.The existing allocation methods for fixed transmission cost are systematically and comprehensively summarized. The different characteristics of each kind of methods are analyzed in details. The main reasons why the cooperative game theory fits for the allocation of fixed transmission cost are discussed. The cooperative game formulation of fixed transmission cost is proposed. Then the general types of solution of cooperate game are introduced. And their advantages, disadvantages as well as applicability are identified.Under power markets with many kinds of transactions modes such as pool modes and bilateral modes, a novel allocation of fixed transmission cost is presented. This method is applicable for power markets with various transaction modes and considering the transmission congestion. At first, the nucleolus formulation of fixed transmission cost allocation is proposed in that the nucleolus solution of a cooperative game is absolutely existing and unique. Secondly, the equvalent pool transaction is identified. Then the bilateral transactions are changed into the equivalent pool ones. Thirdly, the fixed transmission cost is allocated to the loads in pool modes in the basis of the nucleolus formulation. And half of the cost shared by one load is allocated to all generators who supply power to this load. At last, this share of fixed transmission cost is allocated to every generator in proportion to their contribution to this load.The area-divide nucleolus method is proposed in that the nucleolus formulation of fixed transmission cost allocation ignores the transmission congestion. When some transmission lines congest, the network can be divided into some sub-areas according to the level of locational marginal prices. Thus no transmission congestion is at the interior of each sub-area. Then the fixed cost is allocated to each sub-area using the equivalent bilateral transaction method. And the fixed transmission cost is allocated to the users due to the nucleolus formulation inside sub-areas. In this case, the computation of the nucleolus in sub-area becomes much simpler than in the whole interconnected multi-area system.A cost pricing method is also proposed. It fits for the power markets with pool and bilateral transactions. And by it the fixed transmission cost is directly and completely allocated to each pool and bilateral transaction in the power system. The basic transaction vector is designed to describe the pool and bilateral transaction uniformly in the power markets. The transmission line usage by transaction is defined. According to this usage, the fixed transmission cost is directly allocated to all transactions. If the cross subsidization is among transactions in the allocation process, the fixed transmission cost should be priced based on the exterior dependence on the network. This method is suitable for the power markets with loop flows in the transmission network and components with two or more ports, in which the P-Q interaction is also considered. This method is of explicitly physical meaning and provides abundant economic incentives to the users.The fixed transmission price at each bus provides the users with financial incentives. As for it, a type of economical signal is defined. This signal reflects that diferent buses have different prices. It also encourages the generators and loads to choose reasonable buses to connect to the network. On the other hand, the financial incentive from the return of transmission investment is identified. And the evaluation of this financial incentive is deduced from the transmission expansion planning model. This evaluation concerns that the fixed transmission cost has influence on the transmission investment.Simulation results of several test systems show that the fixed transmission cost allocation based on nucleolus and pricing facing transactions are good in both theoretical deriving and economic meanings. The allocating results are reasonable.This paper focuses on the study of transmisson investment and fixed transmission cost pricing as well as its finacial incentives. It is expected to be beneficial for the development of electricity markets.