Analysing electricity flows and congestions: looking at locational patterns

Abstract

Countries are making important efforts decarbonising their electricity generation mix. In this context, improving the operational efficiency enables better use to be made by renewables and the grids. However, the location of new capacity might be relevant from the social welfare point of view when private decisions might affect the power system efficiency. In this paper, we analyze the Spanish transmission grid with the aim to explore in the power system efficiencies with a high share of renewables in the generation mix. We explore in the location of the generation technologies to see how efficient they are located with regard to the consumption. We find wind is one of the least efficiently located, which has implied relevant grid investments paid by consumers. Moreover, a high concentration of renewables increases grid-congestions, which might constrain locations for future capacity. Our results highlight there is a trade-off between incomes from RES and grid costs paid by consumers. Therefore, we suggest RES policies should include some locational incentives. We analyze pros and cons from some choices and conclude countries should provide further grid information to incumbents and also include locational incentives in future RES auctions. Indeed, results from this paper represent a first stage in the design of these locational incentives.