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Impact of the regulatory framework for transmission investments on the cost of renewable energy in the EU.
Saguan, Marcelo Meeus, Leonardo
Saguan, Marcelo
Meeus, Leonardo
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Publication Type
Journal article with impact factor
Editor
Supervisor
Publication Year
2014
Journal
Energy Economics
Book
Publication Volume
43
Publication Issue
May
Publication Begin page
185
Publication End page
194
Publication Number of pages
Collections
Abstract
Under the current regulatory frame in the EU, transmission planning is done at the national level to maximize national welfare, rather than European welfare. In this paper, we develop a competitive equilibrium model that calculates the impact of this imperfect regulatory framework on the cost of renewable energy. We apply the model to a power system with two interconnected zones, and find that the impact is case specific, but significant. We also find that the negative impact of national transmission planning on the cost of renewable energy is more significant in a state of the world in which Member States trade renewable energy, but that this negative effect is much smaller than the positive effect of renewable energy trade between Member States. We conclude that the imperfect regulatory framework for transmission investment is a significant cost for renewable energy in the EU, but that it should not stop Member States from trading renewable energy.
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Keywords
Renewable Energy, Transmission Network, Electricity Market, Modeling