Abstract
There is an ample consensus about the existence of significant economies of scale in the coordination (which does not necessarily imply centralization) of the operation and capacity expansion planning of electric power systems. It is believed that, in order to capture all the coordination-related economies of scale, very large systems have to be considered. A figure of several tens of gigawatts (GW) of installed generating capacity has been mentioned as the minimum size that is needed to exhaust these economies (see Joskow and Schmalensee, 1983). Recent studies within the context of the European Union (EU) internal market for electricity seem to indicate that much larger systems may still benefit from coordination practices. These systems will typically encompass several utilities and, in most cases, they may also involve a number of different countries.
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