Modeling and simulation of the interconnected see and italy electricity markets

The focus of the paper is on the long-term effects of the construction of a physical interconnection between SEE and Italy using a 1000-MW DC link from Italy to Albania. The impacts of this interconnection path are significant for the markets in Italy and SEE. The modeling issues are discussed and the simulation tool used to emulate the possible developments is presented. The use of scenario analysis is described and its ability to increase the realism of the simulations is discussed. We provide some representative results of the simulations. In addition, we discuss some key aspects of the cost-benefit analysis of the DC link. The extensive set of simulation studies indicate the gains in social welfare that may be realized as a result of the DC link. The financial viability of the transmission investment is considered from a private investor viewpoint taking into account the impacts of various sources of uncertainty.