Transmission Capacity Expansion Investment Decision in Electricity Market

Abstract

The building of transmission networks in electricity market may always be faced with many uncertain factors, therefore the traditional routines for transmission investment decisions could not meet the new demands of the market. This paper aims at analyzing the behaviors, characters of transmission investment and its scale economy, meanwhile, it will focus on studying the uncertainty of the transmission investment in the electricity market. Options views is adopted for the dilatation of transmission lines to dominate the opportunity costs of the dilatation investment and accordingly , the optimal decision discriminant model is built in the light of the stochastic theory , providing a new assistant decision method for the transmission dilatation investment. Analysis of examples show that the previous model could discriminate reasonably the scale capacity of different transmission lines and their scale economy after dilatation, providing reliable basis for decision-makers.