Transmission investment in the Peruvian electricity market: Theory and applications

Arbeitspapier

This research presents an application of the Hogan, Rosellón and Vogelsang (2010) (HRV) mechanism to promote electricity transmission network expansion in the Peruvian electricity transmission system known as SEIN (Sistema Eléctrico Interconectado Nacional). The HRV mechanism combines the merchant and regulatory approaches to promote investment into transmission grids. This mechanism gives incentives for efficient investment in expansion of the network by the rebalancing over time of the fixed and variable charges of a two-part tariff in the framework of a wholesale electricity market with locational pricing. The expansion of the network is carried out through the sale of Financial Transmission Rights (FTR's) for the congested lines. The mechanism is applied for 103 nodes of the SEIN using detailed characteristics of generators, nodes and transmission lines. Under Laspeyres weights and linear cost of expansion of transmission capacity, it is shown that prices converge to lower levels as a result of increased transmission capacity.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: DIW Discussion Papers ; No. 1171

Classification and Topics

• Classification: Wirtschaft ; Economics of Regulation ; Transportation: General ; Electric Utilities ; Energy: General
• Subject: Electricity transmission expansion ; incentive regulation ; Peru ; congestion management

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Ruiz, Erix ; Rosellón, Juan
• Event: Veröffentlichung
• (who): Deutsches Institut für Wirtschaftsforschung (DIW)
• (where): Berlin
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/61313
• Last update: 10.03.2025, 11:44 AM CET