Valuing Expansions of the Electricity Transmission Network under Uncertainty: The Binodal Case
Transmission investments are currently needed to meet an increasing electricity demand, to address security of supply concerns, and to reach carbon-emissions targets. A key issue when assessing the benefits from an expanded grid concerns the valuation of the uncertain cash flows that result from the...
| Autores: | , |
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| Tipo de documento: | artigo |
| Data de publicação: | 2011 |
| País: | España |
| Recursos: | Universidad del País Vasco |
| Repositório: | Addi. Archivo Digital para la Docencia y la Investigación |
| OAI Identifier: | oai:addi.ehu.eus:10810/11574 |
| Acesso em linha: | http://hdl.handle.net/10810/11574 |
| Access Level: | Acceso aberto |
| Palavra-chave: | electricity transmission network congestion expansion load fuel prices generation costs emission allowances EU Emissions Trading Scheme (ETS) GHG abatement power COMPUTER SCIENCE, MULTIDISCIPLINARY |
| Resumo: | Transmission investments are currently needed to meet an increasing electricity demand, to address security of supply concerns, and to reach carbon-emissions targets. A key issue when assessing the benefits from an expanded grid concerns the valuation of the uncertain cash flows that result from the expansion. We propose a valuation model that accommodates both physical and economic uncertainties following the Real Options approach. It combines optimization techniques with Monte Carlo simulation. We illustrate the use of our model in a simplified, two-node grid and assess the decision whether to invest or not in a particular upgrade. The generation mix includes coal-and natural gas-fired stations that operate under carbon constraints. The underlying parameters are estimated from observed market data. |
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