BRUSSELS, Belgium and CAMBRIDGE, Massachusetts, October 30 /PRNewswire/ --
Regional transmission planning has become a high profile issue in recent years, following blackouts in the United States and Europe. A study by economists at The Brattle Group, published by the Australian Energy Market Commission (AEMC), surveyed transmission planning processes used in the power markets of different regions across the European Union, the U.S., and Canada, and identified key challenges in designing effective planning processes.
"Transmission planning presents new challenges in a world of competitive markets and long-distance trading of power; it requires close co-operation between multiple owners of transmission infrastructure," noted Boaz Moselle, one of the study's authors and head of The Brattle Group's Brussels office. "Without effective planning, competitive markets may not function well and security of supply could be weakened. Transmission planning is also key to efficient development of the new infrastructure required to connect remotely-located renewable energy resources, whether it's in Scotland or California."
The Brattle study surveyed transmission planning processes in regional electricity markets with multiple transmission owners in Europe and North America and identified three key design parameters for regional transmission planning processes:
1. Setting rules for participation. International experience calls into question the effectiveness and efficiency of arrangements based only on voluntary participation in regional planning. 2. Assessing the costs and benefits of new transmission. Justifying construction of new transmission lines primarily based on economic reasons rather than technical "reliability" standards requires a comprehensive framework to analyse costs and benefits. 3. Sharing of costs and benefits among transmission owners and market participants. A transparent mechanism to share project costs and benefits among market participants is generally necessary to overcome opposition to needed expansions, because customers outside the investing transmission owner's footprint frequently benefit and would not otherwise contribute to the costs.
The study shows that recent regulatory requirements in the U.S. have led to a number of promising regional transmission planning processes. However, according to Johannes Pfeifenberger who leads Brattle's North American energy consulting practice, the U.S. processes rely heavily on a somewhat artificial distinction between transmission projects that are justified by reliability standards and those that are justified primarily for economic reasons. "Unfortunately, the cost-benefit analyses used to justify economic projects often are very prescriptive and narrowly focused, which can undermine desirable transmission investments by underestimating their benefits," Pfeifenberger commented.
"Our study also reveals some real challenges that the EU faces in developing a transmission network that can support an integrated power market and allow Europe to meet its targets for renewable energy. The Commission's third energy package lays the basis for more EU-wide planning, but a great deal of hard technical work is required for successful implementation," Moselle added.
The Brattle study, "International Review of Transmission Planning Arrangements," is available on the website of the AEMC, at http://www.aemc.gov.au/pdfs/reviews/National%20Transmission%20Planner/br... .pdf (Due to the length of this URL, it may be necessary to copy and paste this hyperlink into your Internet browser's URL address field. Remove the space if one exists.) as well as at http://www.brattle.com.
The Brattle Group provides consulting services and expert testimony in economics and finance to corporations, law firms, and public agencies worldwide. Areas of expertise include antitrust and competition, valuation and damages, and regulation and planning in network industries. For more information on The Brattle Group, please visit http://www.brattle.com.
Web site: http://www.brattle.com
Laura A. Waters of The Brattle Group, +1-617-864-7900, firstname.lastname@example.org