New Technical Brochure reviews how utilities across the world use markets and regulatory frameworks to ensure timely investment in transmission
Working Group C5.18 has produced Technical Brochure 692, ‘Market price signals and regulatory frameworks for coordination of transmission investments'. The Australian member on the working group was Joel Gilmore. This should be of general interest to our members as there is growing concern in Australia about system security balanced against rapidly rising prices, and timely transmission investments play a critical role here. While some may argue that increasing distributed generation and lower cost storage may reduce the need for transmission, the current evidence is that, while its role and function will evolve over time, transmission will continue to be critical for the foreseeable future. This changing role does make the timing and nature of the transmission investment more difficult to justify with valid market signals and appropriate regulatory frameworks becoming even more important.
WG C5.18 – Market Price Signals and Regulatory Frameworks for Coordination of Transmission Investments
Technical Brochure 692, ‘Market price signals and regulatory frameworks for coordination of transmission investments', notes large investments in electricity transmission networks are needed in many power markets in coming years for various reasons such as integration of new (often intermittent renewable) generation, cross-border market integration, increase of demand, or security of supply improvement. At the same time, the function of the transmission network is evolving. With the development of small generators, active consumers and prosumers, demand increase may no longer be the main driver of transmission investments. In the future transmission networks will be more and more used as an insurance against local shortages (i.e. periods when local generation would be lower than local demand). Therefore despite a lower use of transmission, the need for transmission capacities may remain the same or even increase. Networks, market organisations and network charging schemes need to be adapted to this new paradigm.
In this context, deciding where, what and when to invest in transmission infrastructure is becoming increasingly complex. In areas experiencing sluggish demand and uncertain developments, the risk of stranded assets (i.e. assets that do not provide benefits to grid users) is greater than in the past. The achievement of efficient power systems, from operational and planning perspectives, requires effective coordination, both horizontally (coordinating investment between neighbouring grids and between various transmission owners) and vertically (coordinating generation and transmission investments). Such coordination is necessary to deliver innovative, optimal solutions to the society. To achieve this, three main aspects must be considered:
The Technical Brochure concludes that: