TY - UNPB

T1 - A welfare analysis of the electricity transmission regulatory regime in Germany

AU - Kemfert, Claudia

AU - Kunz, Friedrich

AU - Rosellón, Juan

PY - 2015

Y1 - 2015

N2 - We analyze the current regulatory regime for electricity transmission in Germany, which combines network planning with both cost-plus and revenue-cap regulations. After reviewing international experiences on transmission investment, we first make a qualitative assessment of the overall German regime. The German TSOs have in general incentives to overinvest and inefficiently inflate costs. We further develop two models to analyze the transmission planning process. In the first model there is no trade-off between transmission expansion and generation dispatch. This is a modeling set-up similar to the one actually used in the German transmission planning (Netzentwicklungsplan). A second model alternatively allows for such a trade-off, and thus represents an optimal way of transmission network planning. Simulations with the two models are carried out and compared so as to illustrate the amount of excessive transmission capacity investment and welfare losses associated with the current regime.

AB - We analyze the current regulatory regime for electricity transmission in Germany, which combines network planning with both cost-plus and revenue-cap regulations. After reviewing international experiences on transmission investment, we first make a qualitative assessment of the overall German regime. The German TSOs have in general incentives to overinvest and inefficiently inflate costs. We further develop two models to analyze the transmission planning process. In the first model there is no trade-off between transmission expansion and generation dispatch. This is a modeling set-up similar to the one actually used in the German transmission planning (Netzentwicklungsplan). A second model alternatively allows for such a trade-off, and thus represents an optimal way of transmission network planning. Simulations with the two models are carried out and compared so as to illustrate the amount of excessive transmission capacity investment and welfare losses associated with the current regime.

KW - Economics

KW - transmission planning

KW - nodal prices

KW - congestion management

KW - electricity

KW - Germany

M3 - Working papers

T3 - DIW Discussion Papers

BT - A welfare analysis of the electricity transmission regulatory regime in Germany

PB - Deutsches Institut für Wirtschaftsforschung (DIW)

CY - Berlin

ER -