Transmission network expansion by a proactive TSO: a case study

Transmission network is an essential facility, critical to the operation of well-functioning electric power markets. However, it appears to be lacking in many regions. According to literature, vertical unbundling and proper incentive regulatory contracts are favorable conditions to induce a transmission company to select the optimal grid capacity, but at the same time “contextual enablers” can play an important role in facilitating or hindering transmission investments. We focus on the case of Italy, where full vertical separation and a well-designed regulatory incentive scheme apply. However, environmental constraints and siting procedures appear to dilate the duration of the process to unacceptable lengths. Accordingly, it is worth evaluating the suitability of a proactive approach, in which the TSO anticipates the administrative procedures, in order to assure optimal and well-timely transmission investments. We actually verified the efficiency of such a proactive approach for a real new transmission project.