Renewable energy integration: Mechanism for investment on bulk power transmission

Transmission has established itself as a natural monopoly, and as such, the prices and remaining access and operating conditions of the transmission system have been regulated. In the regulations existing before the electric sector reform there was a single planner that determined the generation and transmission expansion. However, each time more mechanisms have been implemented that have allowed individualizing the agents of interest and as such, uncoupling planning and investment from the power plants and grids. This has brought a problem based on the optimal and timely investment on grids, mainly when power injection is considered with high uncertainty, as it usually happens with renewable energies. This work faces this problem considering a grid game under a non-cooperative environment, which is solved under the concepts of the Nash-Bayesian equilibrium. Two case studies are implemented, a bilateral and a coordination scenario for a reduced grid of the Chilean interconnected system. The Bayesian mechanisms describe the various interests of the agents, which tend to be more conflictive, hence increasing the complexity of the transmission expansion game. In coordinated environments it becomes necessary to create incentives for a timely investment in the grid. In grid modeling there are two core aspects to be considered from the strategic viewpoint. The first one is the costs and benefits model. They allow determining how the grid is formed based on individual incentives to maintain or not maintaining its links. The second aspect is the one that determines or forecasts how the individual incentives are translated into the formation of the grid. It is concluded that without a correct design of incentives to expand the grid, transmission will become a constraint for the optimal participation of renewable energies.