Impact of network payment schemes on transmission expansion planning with variable renewable generation

- We study the impacts of network payment schemes on network configurations.
- Multi-annual transmission expansion planning models are considered.
- We use seven performance metrics to evaluate the effect of each payment scheme.
- A realistic case study based on the main power system in Chile is analyzed.
- Total system cost is highly related with transmission tariff discrimination.

A large number of studies have dealt with the Transmission Expansion Planning (TEP) problem. However, few investigations have focused on analyzing the impacts of network payment schemes on network configuration and the benefits/losses distribution among the participants in electricity markets. In this paper, we propose a multi-annual transmission expansion planning model considering four different network payment schemes to finance the construction of new transmission lines, seeking to reduce the total system costs. Wind and solar power generation are included in the model taking into account their variability. The proposed models are reformulated as Mixed Integer Linear Programming (MILP) problems. We use seven performance metrics related with congestion, nodal prices and generator benefits, among others, to evaluate the effect of each payment scheme. A realistic case study based on the main power system in Chile is analyzed to illustrate the proposed models. It is shown that integrating line cost-recovering equations into the TEP model may result into a more realistic and less congested power network. Also, total system cost is highly related with transmission tariff discrimination. In that way, tariffs with high location dependence perform better in the case studied, the Chilean power system.