Gains from trade and benefits of transmission expansion for the IEEE power engineering society

Restructured wholesale electricity markets require a new approach for evaluating the economic benefits of transmission expansion. This article summarizes a transmission economic assessment methodology called TEAM that has been developed by the California ISO´s Department of Market Analysis. The gains from trade principles from the field of international trade provide the fundamental basis to evaluate benefits consistently across consumers, producers, and transmission owners in different regions impacted by the transmission expansion. This method captures the benefits that come from the increased trade of energy between regions that should result in serving load at lower overall costs. The TEAM approach can be used to justify transmission expansion in markets utilizing on locational marginal pricing.