engleski

Optimization of costs and benefits in Inter TSO Compensation mechanism

Purpose of this paper is to specify the benefits in Inter TSO Compensation mechanism. The intension is to contribute to the future solution for transit in the European Power Market. Cross-border trading is influenced by several mechanisms (congestion management, transit, tariffs, investment) which need to be examined from technical and economical point of view. All mechanisms are interconnected and represent an extensive and complicated set of problems. Cross border exchange has direct economic benefits leading to increased competition, increased market liquidity, stabilized prices and increased security of supply. In the Regulation 714/2009/EC and Guidelines 774/2010/EC (838/2010/EC) for ITC there is no clear definition of the benefits-concept and elements that should be considered. The purpose of this paper is not going into detail on the practical procedures for ITC. We will discuss some of the principles that are suggested and/or applied and study possible consequences. Presently there are one or more TSOs for each country in Europe. As long as we have more than one TSO, we are facing the problem of how to divide costs and revenues among the involved companies. Some illustrations and calculations were done in MATLAB based on full AC optimal power flow. The balance between benefits and costs are analyzed depending on inter-area conditions. Power exchange can cause increased flow and losses, but can also be beneficial and reduce losses inside the “hosting” country. One reasonable hypothesis is that the major benefits of hosting cross border flows are related to congestion rent and reduced costs to security of supply maintenance. It must be regarded unfair if transit via a third party’s grid causes extra costs that must be covered by the customers on that grid. On the other side, it is important to take the benefits of trade into account when designing the ITC arrangement, but none of the negotiated methods (With-or-Without-Transit, Average Participation, Marginal Participation, Improved Modeling for Infrastructure Cost Allocation) include this. The methods do not take into account the establishment of exchanges and the interactions in trade with a price response. In an efficient power system the less expensive generation resources should be used first. To have more benefits from electricity trading new investments are needed, but we have shown that sometimes it is not clear if we got the right incentive (interaction of congestion rent, transit and tariffs). In the end we have proposed general algorithm for compensation of losses which include calculation of benefits with detailed principles: real losses with transits minus estimated losses without transits minus estimated benefits with transits. These principles could be applied to any future solution for transit.

optimization; costs; benefits; ITC mechanism

nije evidentirano