On The Role of International Benchmarking of Electricity Transmission System Operators Facing Significant Investment Requirements

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Abstract: Electricity networks currently face massive investment requirements. This paper argues that, given the investment requirements, (international) benchmarking is not an adequate tool for the regulation of transmission system operators (TSO). Errors i...n the outcomes of benchmarking will likely distort network investment and therefore the costs of doing it wrong are high. Whilst acknowledging the merits of network regulation as such, the paper discusses options to reduce the weight of benchmarking in TSO regulation and discusses options that do not rely on benchmarking at all.hide

Capacity Choice In Decentralized Grid-Bound Industries

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Abstract: In grid-bound industries, individual investment in production capacity constitutes a public good in the form of a delivery insurance for all market participants. We analyze the effects of entry (caused e.g. by deregulation) on capacity and output c...hoice in these industries. To this end we employ a Cournot-model with symmetric firms and firm-specific capacity shocks. Our results reveal that the standard welfare-enhancing competition effect of an increasing number of firms, induced by lower prices and higher output quantities, is countervailed by a decrease in delivery insurance and thus by a growing probability of delivery disruptions (blackouts). Beyond a certain number of firms, the latter effect dominates. As a consequence, the socially optimal number of firms is bounded. We calibrate the model on data of the German electric power market to get a notion of this optimal number firms.hide

The Allocative Efficiency of the Dutch Gas-Balancing Market

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Abstract: The recently introduced market-based gas-balancing regime in the Netherlands is meant to improve the efficiency of gas balancing in order to enhance the development of the Dutch wholesale market for gas. This paper shows that the efficiency of the ...new balancing regime could be improved further by making the market simpler with less restrictive rules. By removing the reserve market, the incentive component as well as the obligation on all players to offer assistance gas, the balancing regime would still enable the TSO to realise network stability but with less allocative inefficiencies.hide

Governing a North Sea Grid Development: The Need for a Regional Framework Treaty

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Abstract: The North Sea coastal states are exploring the possibility of collaborating on the development of cables for transmitting electricity in waters subject to their jurisdiction with a view to creating an off shore grid. I argue in this article that th...ey should support their political resolution, if they agree to proceed with this initiative, by entering into a treaty that governs the expansion of electricity infrastructure in the marine region. A legal framework is required because of the significant potential for the complex process that would be involved with the formation of a regional grid to depart from an optimal course for advancing the North Sea states’ shared goals of providing the infrastructure needed for decarbonising their energy supplies whilst maintaining energy security at least cost. A framework treaty would enhance their ability to set and keep the development of transmission networks in the North Sea on a pathway that leads to mutually beneficial outcomes.hide