Abstract
Developing a regional power system to achieve a high level of integration of national systems requires sufficient development of the regional transmission grid. This is possible only with appropriate schemes for the complete cost–benefit analyses, and cost allocation of these transmission investments, which plays a critical role in the selection of the most efficient network investment and the proper assignment of their cost to the national systems. Network reinforcements affect the operation of power systems and, therefore, the externalities of power generation. This paper examines the impacts of integrating local air pollution damage from power production within the benefit assessment and cost allocation of transmission investments. The paper describes the methodology followed and illustrates its application in a real-life case study where a simplified version of a European network is considered. Within this case study, we have assessed the impact of considering the reduction in air pollution damage achieved through a particular HVDC project between France and Spain on the benefits, and benefit-driven cost allocation, computed for this project. In this case study, local pollution related benefits are a relevant fraction of the overall benefits of the considered transmission project. However, considering the local air pollution benefits of the project does not affect the net positive benefits of each country significantly, resulting in a limited change in the cost allocation of the project.
Highlights
We propose a methodology for this, and apply it to the benefit assessment and cost allocation analysis of a relevant transmission project in Europe for several paradigmatic future energy scenarios defined by ENTSO-E
As a result of the consideration of the impact of the project on the local environmental damage within each country, the share of the total positive benefits produced by the project that is enjoyed by Spain increases from 83% to 85%, while that for Portugal decreases from 15% to 14% (Table 7)
Large transmission investments can be expected in the future and should bring fundamental changes in the operation and investment decisions of the power system
Summary
Current power systems have experienced substantial changes in recent decades. Increasing concerns about global warming and pollution have triggered the deployment of renewable energy generation. The European Union (EU) follows an ambitious strategy to increase the renewable energy share and reduce greenhouse gas emissions. The Union aims to lower these emissions by 40% from 1990 levels in all sectors, while increasing the share of renewable energies in final energy consumption to 32% by 2030 [1]. Since emissions from electricity generation are easier to mute compared to the other emitting industries, the electricity power sector is under more pressure to reduce emissions. Carbon emissions within the EU should drop to 57%–65% by 2030 in the power sector, and nearly to zero by 2050 [2]. California, being the pioneer state in emission reductions and clean energy investments, has set a goal of 100% clean electricity by 2045 [3]
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