New Spain: France Transmission Line: A Cost-Benefit Analysis

Abstract

As the costs for the new planned underground high-voltage direct current (HVDC) line between Spain and France exceed the ones of alternating current (AC) overhead line alternatives it raises the question if the high costs can be justified by adequate benefits for society like increased security of supply. For this reason, the economic effects of the planned HVDC underground transmission line are evaluated through a cost-benefit analysis and the results are compared to an alternative new AC overhead line along the same route as well as an upgrade of a nearby AC overhead line. For an evaluation of the economic welfare effects, investment and operating costs as well as benefits from increased security of supply are quantified using the electricity network model ELMOD. All considered line options result in overall positive discounted net welfare gains for society with the new AC line option showing the highest ones. However, it is stressed that the HVDC solution holds certain advantages over the AC technology that cannot be explicitly quantified in a line assessment.