Methodology for assessing transmission investments in deregulated electricity markets

Transmission system planning in deregulated markets often includes a set of proposed alternative expansion schemes instead of a single optimal network solution. In this paper, a methodology is proposed for the economic evaluation of alternative transmission expansion plans, based on several indices that measure the market performance of the expansion schemes. The proposed methodology can assess in a realistic way both reliability-driven as well as economic-driven transmission expansion projects. In order to demonstrate the proposed methodology, three possible transmission expansion solutions over the IEEE 24-bus reliability test system are compared. The indices introduced are calculated for each scenario scheme and the results are assessed in order to determine the scenario with the best cost-benefit economic performance. This paper derives from the work performed for the IRENE-40 EU research project.