Modeling the Diversification Benefit of Transmission Investments

Increased share of wind power in the electricity generation mix brings fluctuating generation and increases the uncertainty in power system. To handle this varying net load (i.e. the difference between generation and load), the need for balancing services increases. It can be said that reducing the cost of balancing services becomes one of the major challenges in the following years for the electricity market. The idea of this project is to prove that additional transmission capacities can increase the alternatives for procurement of the balancing services by substituting the remote cheap balancing services with the local expensive ones. Transmission planning processes which consider this type of benefit of transmission investments, the diversification benefit, can help to reduce the cost of the procurement of ancillary services.