Transmission Network Investment as an Anticipation Problem
Power generation and transmission are complementary activities that must be coordinated to ensure an optimal use and development of the transmission network. This coordination is today more difficult in a liberalized system, because of unbundling and the freedom for investors to choose their generation technologies (Joskow, 2006). Shorter investment time between generation and network creates uncertainty for the network planning and congestions. In the economic literature, the efficiency of anticipating generation investment has been under-evaluated assuming that it is a cost free activity.
Our model evaluates the effect of anticipation costs of the generation investments by the Transmission and System Operator (TSO) and defines in which cases it is more efficient that the TSO be proactive (with anticipation) or reactive (without anticipation).
