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The implication of the European inter-TSO compensation mechanism for cross-border electricity transmission investments
Hadush, Samson Yemane De Jonghe, Cedric Belmans, Ronnie
Hadush, Samson Yemane
De Jonghe, Cedric
Belmans, Ronnie
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Publication Type
Journal article
Editor
Supervisor
Publication Year
2015
Journal
International Journal of Electrical Power & Energy Systems
Book
Publication Volume
73
Publication Issue
December
Publication Begin page
674
Publication End page
683
Publication NUmber of pages
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Abstract
An efficient cross-border investment and well-designed markets and regulatory instruments are crucial prerequisites to the creation of a fully functional European internal electricity market. One of the prominent regulatory measures taken to speed up the creation of the internal market was to abolish tariff pancaking by replacing cross-border tariffs with an Inter-Transmission System Operators Compensation (ITC) mechanism through which transmission system operators (TSOs) can compensate each other. In this study, the implication of introducing such mechanism on the cross-border investment outcome is explored. The results indicate that the current ITC mechanism is loosely linked to the cross-border investment decisions of TSOs. In addition, the study concludes that factors such as the ITC fund size and the number of participating TSOs can influence the investment outcome.
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Keywords
Energy Markets, Energy Networks, Energy Supply Chains, Entrepreneurship