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Planning future transmission grid expansion investments for a sustainable
pan-European energy system: the REALISEGRID approach
G. Migliavacca 1 , A. L’Abbate, I. Losa, R. Calisti (RSE 2 SpA, Italy)
K. Jansen (TenneT, The Netherlands)
K. Reich, O. Wadosch, F. Leuthold, G. Layr (Austrian Power Grid, Austria)
O. Azadegan, R. Hager, Ch. Todem (RIECADO GmbH, Austria)
H. Weigt (University of Basel, Switzerland)
E.M. Carlini, C. Vergine, A. Sallati (TERNA, Italy)
P. Adam, G. de-Saint-Martin, X. Gallet, J.-Y. Leost (RTE International, France)
SUMMARY
The European transmission grid plays a critical role towards the achievement of the energy and
climate change policy targets enforced by the European Commission for 2020 and beyond:
environmental sustainability and integration of Renewable Energy Sources (RES), security of energy
supply and system reliability, competitiveness and energy market liberalisation.
To address those challenges, a progressive system re-engineering introducing new driving criteria for
transmission network expansion is more and more necessary throughout the continent. This has been
also stressed by different recent documents and proposals issued by the European Commission.
The European research project REALISEGRID (September 2008 – May 2011) has investigated the
present transmission planning practices and set up a new integrated transmission planning framework
able to cope with the challenges deriving by the increasing role of RES and by the decreasing level of
information a TSO (Transmission System Operator) has in a liberalized market with respect to the old
vertically integrated situation.
Aim of this paper is to present two methodologies of such a framework, highlighting the main features
and showing in particular the results of their application to real scale cases referred to the European
transmission network.
KEYWORDS
Analysis of investment, competitiveness, cost-benefit analysis, environmental sustainability, RES
integration, security of energy supply, transmission planning.
1 Gianluigi.Migliavacca@rse-web.it
2 RSE (Ricerca sul Sistema Energetico) is the new denomination of former ERSE/CESI RICERCA.
The research leading to these results has received funding from the European Community’s Seventh Framework
Programme (FP7/2007-2013) under grant agreement n° 219123 (REALISEGRID project).
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1. INTRODUCTION
The European electricity transmission network plays a critical role towards the achievement of the
energy and climate change policy targets set by the European Commission (EC) for 2020 and beyond:
an effective grid integration of a steadily increasing amount of Renewable Energy Sources (RES)
represents a crucial priority, while keeping the system acceptably reliable and progressively removing
all obstacles to the future creation of a unified European energy market. To address those challenges, a
gradual system re-engineering is more and more necessary throughout the continent: this will require
the introduction of new criteria for transmission network expansion planning.
It is important to highlight that, in general, transmission planning is a very complex process, which is
made even more complicated by recent trends and challenges. Nowadays, in a liberalized
environment, the vertically unbundled Transmission System Operators (TSOs), responsible for the
sole transmission system, have to plan the expansion of their network by minimising transmission
costs (investment and operation) and pursuing social welfare maximization, when requested by
specific regulation, while overcoming bottlenecks and meeting static and dynamic technical
constraints to ensure a secure and economically efficient operation [1].
The basic tasks of transmission grid planners can be summarized with the following steps [10][13]:
check whether acceptable technical limits might be exceeded on the existing transmission network
on the basis of scenarios forecasting future power and energy flows, in standard as well as in
contingency conditions (security analysis);
devise, in presence of criticalities, a set of possible transmission reinforcements/strategies that
could overcome the constraints (candidates selection);
perform a cost-benefit analysis among the candidates so as to rank them by priority order taking
into account both costs and benefits provided to the system.
Up to now, the TSOs have mainly kept a national scope in planning grid extension. However, the
central role played by the transmission infrastructures within the European energy policy calls more
and more for a truly pan-European approach to the planning of new assets, especially those having a
significant cross-border impact. This has been particularly highlighted by recent documents of the EC,
like the so-called Energy Infrastructure Package (Nov. 2010) [7] and the proposal for a new policy
regulation on Trans-European Energy Network (TEN-E) infrastructures [14]. Such an approach entails
harmonizing the different national regulations, fostering the achievement of a coherent policy
promoting the most urgent reinforcements and the most techno-economical solutions, overcoming
possible local opposition by means of transparent information to the public able to provide clear
figures of costs and benefits.
Transmission planning is the central subject investigated by the European research project named
REALISEGRID (http://realisegrid.rse-web.it) [13], led by RSE, to which twenty European partners,
among which four TSOs, have provided substantial contributions.
Within the REALISEGRID transmission planning framework, two different methodologies have
investigated how the planning practice could be modified in order to face the challenges described
above: one oriented to the investments analysis by selection of the candidates for network expansion
and one aimed at performing a multi-criteria cost-benefit analysis able to establish a priority order
among investments of European interest.
Concerning investments analysis for candidates’ selection, three approaches can be combined
considering various techno-economic and financial aspects related to transmission network
expansion. A first engineering focused method emphasizes the aspects of reliability and security
of supply (security induced approach). Another approach is based on nodal pricing and is able to
perform network calculations minimizing dispatching costs as it is typical for optimisation studies
(welfare induced approach). A third method also considers the costs deriving from market clearing
in a competitive environment (auction based approach). The innovative idea proposed by
REALISEGRID is to present an integrated methodology suitably encompassing all three above
aspects.
Concerning cost-benefit analysis, the purpose of REALISEGRID is to develop a system-wide
multi-criteria method for project evaluation able to take into account a broad amount of grid
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expansion benefits, like increased social welfare, losses reduction, more effective dispatch of RES
generation, reduction of CO 2 emission, increased system reliability, etc. This approach aims at
establishing a methodological blueprint for prioritizing new investments in a pan-European
framework. This methodology is applied to a realistic case, namely the transmission projects
bundle belonging to the TEN-E priority axis EL2 related to the borders of Italy with France,
Austria, Slovenia and Switzerland [8]. This region is one of the most interesting ones to assess the
impact and the benefits of future cross-border transmission projects.
The paper focuses on the two proposed methodologies and their respective applications. The analyzed
test bed results provide a picture of how these approaches can be applied to realistic trans-national
cases and what types of answers they can provide for the European system.
In this paper, Section 2 presents the new methodology for investments analysis towards candidates’
selection. The traditional approach to remove network bottlenecks based on security analysis is
complemented and completed with a technical-economical analysis considering costs and prices in
presence of a liberalized market. An application is provided regarding the transmission backbones
around Austria. In Section 3, the new comprehensive multi-criteria cost-benefit analysis, aimed at
ranking alternative reinforcement candidates, is applied by a thorough evaluation of the technical and
economical elements associated to the investments. Then, an application to the above quoted EL2
priority axis is outlined, assessing future investments on the North-Eastern borders of Italy.
2. A NEW METHODOLOGY FOR INVESTMENTS ANALYSIS
The creation of an integrated electricity market requires disposing of an adequate transmission
capacity. To this aim, a fast expansion of the European transmission backbones is urgently needed [2].
The right transmission capacity expansion projects have to be identified which satisfy security of
supply and maximize the social welfare, while considering market operations constraints. All these
aspects are reflected in an integrated market approach [3][4]. Figure 1 provides an overview of this
methodology, in which the limitations of individual approaches focusing on single objectives are
overcome by the combination of the different approaches.
Figure 1: Overview of the methodology for an integrated market approach
Data preparation and assumptions
The dataset considered as starting input for the simulations is based on the REALISEGRID
MARKAL-TIMES long term scenarios for the European energy market [6]. The scenarios results
provide demand, generation capacities and price forecasts up to 2030: here the investigated time
horizons refer to the target years 2020 and 2030. As the long term dataset is aggregated at country
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level it needs to be partitioned and calibrated to the network nodes in order to allow for a power flow
simulation. Conventional generation is clustered in plant types; marginal costs are derived via fuel and
emission costs and distributed considering both the exploitation of areas already allocated to
generation (Brown Fields) and new sites (Green Fields), whereas RES generation is distributed
according to geographical availability. Demand is distributed locationally based on regional GDP 3 .
Furthermore, twelve weighted demand periods with four seasons and three load levels are taken under
consideration for each analysed year.
Among the long term scenarios elaborated in REALISEGRID, only two representative extreme cases
were chosen: one representing a conservative policy with low emission targets (pessimistic case) and
one with ambitious emission targets (optimistic case). The results obtained implementing the two
scenarios highlight two different kinds of investment policies.
The pessimistic case is characterized by late binding emission targets which reduces the requirements
for an ambitious RES increase in 2020 and lead to an emission allowance price of 0 €/t in 2020. The
price level in Europe is characterized by relatively low electricity prices in most of the considered
countries, largely set by coal units. In 2030 the emission targets become binding leading to an
emission allowance price of 110 €/t. This also leads to a shift in the generation park from coal to gas
and a large increase of RES.
In opposition to the pessimistic case, in the optimistic setting emission targets are binding early on
with an emission allowance price of 160 €/t in 2020 which leads to a diverging generation
development and a much earlier large scale RES deployment. The high allowance price also leads to a
high price levels. In periods where renewable, nuclear and CHP 4 generation are sufficient to cover
demand the price level is significantly lower.
Security of supply induced approach
This method is currently implemented by the TSOs to reinforce the grid. New transmission
infrastructures are generally being built in areas where the (n-1) security criterion threshold is narrow
and therefore urgent reinforcements are needed. This approach may naturally lead to different
necessary investments when aiming to ensure the reliability of the grid, the security of supply, the
integration of RES and economic efficiency. The technical approach focuses on the feasibility of
certain extension opportunities including technology choice (e.g. cable vs. overhead line) and
technical constraints resulting from security of supply (e.g. reliability).
The 2018 grid model developed by ENTSO-E (European Network of Transmission System Operators
for Electricity) for the continental European system, extended by including the projects of ENTSO-E
TYNDP (Ten-Year Network Development Plan) [9], is used as network topology reference for the
study: the power system simulation is carried out by the tool Integral. The repartition of generation
and load for each node is adapted towards a precise power flow simulation. A full load flow
calculation (by the tool TNA 5 ) is carried out which yields for all network elements the available
maximum flows (AMF vector) as well as the PTDF (Power Transfer Distribution Factor) matrix. This
matrix represents the physical flows induced by any energy transport from a particular source market
area to a particular sink market area of the region (also referred to as commercial exchange). In case a
violation occurs, two grid reinforcement projects are defined in the model in order to resolve the
selected bottlenecks.
Two bundles of projects have been selected and scrutinised (see Figure 2 and Figure 3). Projects of
category 1 (BAU – business as usual) include mainly 380 kV AC 6 overhead lines (OHLs), the upgrade
with high temperature conductors and double/single circuit loop-in, whereas projects of category 2
(Alternative) are generally more complex and make use of different technologies. They include mainly
3 GDP: Gross Domestic Product
4 CHP: Combined Heat and Power
5 The Transmission Network Analyzer (TNA) is a software tool designed to validate and merge the transmission
network models, as well as to calculate static load flow, related contingency and sensitivity analyses.
Furthermore a technical parameters calculation is performed according to the flow-based coordinated auctions
principles in the regions of South-East Europe (SEE) and Central-East Europe (CEE) (see
http://www.centralao.com/index.phpoption=com_content&view=article&id=111:usefuldocuments&catid=60:documents&Itemid=136
)
6 AC: Alternating Current; DC: Direct Current
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DC transmission assets (OHL or sea cable) and are an alternative to the classic grid expansion
technologies. Projects of category 1 as well as projects of category 2 of a scenario case (optimistic
“opt” and pessimistic “pes”) are each bundled within a project package. The resulting four project
packages will be evaluated according to their influence on social welfare. Furthermore, six PTDF
matrices and AMF vectors are generated by the TNA tool. These AMF vectors and PTDF matrices are
needed for the investment assessment.
As an overview the grid reinforcement projects that would solve (n-1) violations in their respective
areas are listed in Table 1.
Project packages
Project packages
2030_opt project package 1
2030_opt project package 2
2030_pes project package 1
2030_pes project package 2
Figure 4: Project packages
2030_opt project package 1
2030_opt project package 2
2030_pes project package 1
2030_pes project package 2
Figure 5: Project packages
Projects of category 1
Projects of category 2
380 kV AC line Cirkovce-Okroglo (Slovenia)
DC line Obersielach (Austria)–Okroglo (Slovenia)
380 kV AC lines Cordignano–Dugale (Italy) and
Dugale–Ostiglia (Italy)
380 kV AC line Dugale–Ostiglia (Italy) and DC
cable (Italy-Croatia)
high temperature conductors at 220 kV on the
Swiss-Italian border
high temperature conductors at 220 kV on the
Swiss-Italian border
DC line between Switzerland and Italy
DC line between Switzerland and Italy
double-circuit loop-in (Blockland in Germany)
high temperature wire Sottrum–Conneforde
(Germany)
Table 1: Overview of possible projects to solve (n-1) violations in the respective areas
The presented results are very sensitive to the chosen energy scenario and to the spatial distribution of
future supply and demand. This dataset has to be assumed only as a possible example of application
for the methodology and is not to be intended as a contribution on future expansion decisions.
However, the methodology developed and presented here is valuable for supporting TSOs in their grid
investment selection.
Welfare induced approach
This market-based method identifies investment projects dependent on the development of the
electricity price. This in return is dependent on the increase of supply and demand as well as
transmission line projects which increase the overall capacity and volumes of traded electricity. To
derive a welfare optimal network extension the welfare gain due to an expansion measure needs to be
compared to the necessary costs for the extension. The used simulation tool for this analysis is
ELMOD which can be classified as a non-linear optimization model maximizing social welfare under
the assumption of perfect competition, taking into account technical constraints on a DC load flow
approach [5].
The welfare induced approach aims at two objectives: first, the proposed measures to cope with the
security concerns in the network as presented above are evaluated from an economic welfare
perspective; second, further possible measures in addition to the security investments are identified.
The approach allows evaluating single network elements (“lines”) and more complex investment
projects consisting of different individual investments.
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Contrary to the security of supply approach the welfare approach includes all twelve time-slices and
not only critical network cases. This counteracts a typical problem of investments purely based on
security of supply issues: as they are planned to avoid any critical network condition they might of
course be highly relevant for some single hours but may not provide large economic benefits under
usual grid conditions. Hence, the avoidance of any critical network situation might be very expensive
and may not provide sufficient economic surplus.
This is also evident in the two considered project packages. Although they both provide benefits from
a welfare perspective, the relative welfare gain in relation to the overall welfare figure is small. The
BAU extension package obtains a total welfare gain of 3.75 M€ per year whereas the alternative
package obtains a gain of 39 M€ per year. If the welfare model is used to identify welfare enhancing
investments the obtainable economic benefit can be significantly increased showing that beside pure
security induced investment further bottlenecks need to be removed to increase the overall market
efficiency and social welfare.
Having an estimation of the power prices as well as the respective network constraints, the market
simulation can be conducted.
Market-Based Investment Project Evaluation
The combination of load flows and electricity prices make it possible to simulate cross-border auctions
based on data from the explicit auctioning of the CEE region. The results of the allocation are accepted
volumes and market clearing prices, network flows caused by the commercial exchanges between the
different countries, the social welfare of the auction and the total auction income for the participating
transmission system operators. The scarcity prices for transmission capacity are not taken into
account. In addition to that, a deep coordination of the network investments among TSOs has been
neglected. The combination of the above two assumes that a central allocation entity exists which
applies a coordinated allocation based on real time network models.
The mechanism for carrying out the market based investment evaluation is shown in Figure 4. Input
data are taken from the results of the MARKAL-TIMES long term scenarios as well as from the grid
model based on the security of supply approach. The results of the ELMOD calculations are not
directly used. They serve only as reference models to validate the results of the Market Scenario
Generation Module, where the nodal prices calculated by ELMOD for the different electricity markets
are used. Based on these market price forecasts the bidding behaviour of the market players is
simulated. The Market Scenario Generation Module prepares the generation input data for the
different trading/bid scenarios. Price limits are implemented in eAuctionyzer 7 for the different market
scenarios, derived from the long term scenarios. PTDF matrices are assumed as input as well as the
investment project sets. The tool eAuctionyzer uses the bid scenarios and the network (PTDF) to
auction the available network capacity to the market. A linear optimization is used to maximize the
social welfare of the considered region.
The auctions are executed with the same auction algorithm as used in the ECAMT (Electronic
Capacity Auction Management Tool) system of the Central Allocation Office for the CEE region,
implemented in combination with the eAuctionyzer tool. eAuctionyzer provides a module for
generating the bidding structure from the price forecasts of the single market regions. In combination
with the bidding strategy of the traders, the results of an individual auction can be calculated (prices
and capacities).The results (e.g. the welfare gain) of the eAuctionyzer tool are used to carry out a Cost
Risk Evaluation for the different investment project packages taking into account the relevant
uncertainties.
The different grid extensions and consequently the investment plans are compared on the basis of the
social welfare gain produced by these investments. The social welfare gain is calculated considering
the expected usage of the infrastructure by the market (via implicit allocation of the available
capacities). The PTDF matrices are the input data for the grid situations. An implicit allocation
approach is the underlying assumption (“flow-based market coupling”). The simulated increase of
social welfare is used for the investment analysis.
7 http://en.riecado.at/eauctionyzer/
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Figure 6: Mechanism for market based investment evaluation
The results show that the social welfare increases for both investment packages. However, from a pure
macroeconomic point of view also the investment costs need to be taken into account.
The two investment packages and the base case are calibrated on a reference model of the CEE region.
This was also the first evaluated case of the investment projects of a “local view”. To have a more
extended “regional view”, France, Italy and Switzerland were included in the evaluation. Finally the
whole EU was included to give a “European wide view”.
Looking at the results aggregated per scenario, shown in Figure 5, both investment packages would
not be justifiable from a macroeconomic local view. The investment package 2 (Alternative) would
not be reasonable even from a regional or EU-wide view. The package 1 (BAU) shows a positive NPV
(Net Present Value) of the social welfare from a regional and EU-wide view from 80 % to 98% of the
scenarios. This leads to the final conclusion that the investment package 1 (BAU) is preferable from
the macroeconomic view with regard to the range of possible scenarios and risks [4].
Figure 5: Aggregated results for the market integrated approach
3. APPLICATION OF MULTI-CRITERIA COST-BENEFIT ANALYSIS
Recall of the REALISEGRID cost-benefit analysis: a multi-criteria approach
Transmission planning is inherently a multidimensional decision process (technology cost, economic
gain, emission reduction, easy-to-get consensus etc.).
In [1][13][16], the new REALISEGRID multi-criteria approach for transmission expansion costbenefit
analysis has been described, taking into due account the following aspects:
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Definition and evaluation of the relevant costs
Screening of benefits and definition of the ones to be considered
Definition of the methodology and how it relates to traditional cost-benefit analysis.
The goal of a full-fledged cost-benefit analysis is to provide a criterion to co-evaluate the effects of
each benefit weighing them together to provide, after summing up the different effects and detracting
the costs, one single ranking value. This value represents the degree of optimality of a single
expansion project. In this way, different alternatives can be compared, the highest ranked being the
most suitable to be financed and realized. In this way, creating a merit order (ranking) between
alternative reinforcements means mapping the different evaluations of the benefits of each single
infrastructure into one mono-dimensional space to perform a weighed sum of the value of each benefit
and subtract to this the amount of investment costs.
Each national TSO has its own criterion to co-evaluate all the weights with the investment costs, but at
European level a common criterion is needed to provide an objective procedure to evaluate the new
investment.
Once the values have been set up and, using them, a ranking has been calculated between all the
considered reinforcement alternatives, a sensitivity analysis should be carried out to complete the
study.
Application of the REALISEGRID methodology
The proposed approach for transmission investment ranking methodology has been applied to a
realistic transmission planning test case with the goal to carry out a cost-benefit classification of the
most important projects belonging to the TEN-E priority axis EL2. Borders of Italy with France,
Austria, Slovenia and Switzerland: increasing electricity interconnection capacities [11][12].
This region is one of the most interesting ones to assess the impact and the benefits of future crossborder
transmission projects. The TEN-E priority axis EL2 particularly focuses on the borders among
Austria, Slovenia and Italy. Out of the 9 EL2 projects declared of European interest by the European
Commission [8], the focus of the study has been concentrated on the not completed links (see also
Figure 6): Lienz (Austria) - Cordignano (Italy); new interconnection between Italy and Slovenia;
Udine Ovest (Italy) - Okroglo (Slovenia); Venezia Nord (Italy) - Cordignano (Italy); St. Peter
(Austria) - Tauern (Austria); Austria - Italy (Thaur - Brixen) interconnection through the Brenner rail
tunnel.
Figure 6: The TEN-E EL2 Priority Projects of European interest (update: 2010) (adapted from [11])
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It has to be remarked that some changes and re-routing have occurred in the case of the Italian link
Venezia Nord – Cordignano (with the latest terminal replaced by Volpago) and the Italy – Austria
interconnection Cordignano – Lienz (where the Italian end is to be re-planned in Veneto region) [12].
The EL2 reinforcements are often correlated and functional to other projects included in the list. It
would be in fact a non-sense to reinforce one line while leaving untouched all the others topologically
in series with it: they would become the new system bottlenecks. For this reason the proposed
reinforcements have been grouped into three distinct independent corridors: Corridor A, Corridor B
and Corridor C.
Effects of each corridor have been evaluated separately. The internal reinforcements necessary in
order to resolve the network congestions and to obtain a real increase of transit capability have been
added to the corridors bundle too. Investments for the new infrastructures of the three corridors are
supposed to be carried out in 2008, while they become operative in 2015. The benefits are actualized
to the investment time (NPV). The amortization phase is supposed 20 year long with an actualization
rate equal to 8%.
In Corridor A all the lines that are functional to the interconnection Lienz (AT) – ex Cordignano (IT)
are included. In particular, this corridor includes 6 new 380 kV lines, of which 4 double circuit and 2
single circuit links: Isar – St. Peter (already included in “without” scenario from 2020) (double
circuit); Salzach – St. Peter (already included in “without” scenario) (double circuit); Salzach –
Tauern (double circuit); Tauern – Lienz (already included in “without” scenario) (double circuit);
Lienz – ex Cordignano (single circuit); ex Cordignano - Venezia Nord (single circuit).
In Corridor B all the lines that are functional to the interconnection Okroglo – Udine are included. In
particular, this corridor includes 3 new 380 kV lines, of which 2 double circuit and 1 single circuit
links: Bericevo – Okroglo (already included in “without” scenario) (double circuit); Okroglo – Udine
(+ 2 Phase Shifting Transformers) (double circuit); ex Cordignano - Venezia Nord (single circuit).
In Corridor C all the lines that are functional to the interconnection Austria - Italy (Thaur-Bressanone)
interconnection through the Brenner rail tunnel are included. In particular, this corridor includes 4
double circuit lines 380 kV: Oberbachern - Oberbrunn – Thaur (double circuit); Thaur – new 380 kV
substation in Alto Adige region (Gas Insulated Line, GIL) (double circuit); new 380 kV substation in
Alto Adige region – new 380 kV substation in Veneto region (double circuit); West Tirol – Thaur –
Zell Ziller (double circuit) [12].
The cost-benefit analysis has been based on the simulation results on three reference years: 2015, 2020
and 2030. The procedure for the validation of the cost-benefit analysis firstly requires the preparation
of realistic network models and scenarios that represent the most important features and the evolution
of the 380/220 kV European transmission system.
Carrying out the cost-benefit analysis requires to evaluate each benefit by means of a tool able to
assess the relevant improvement in the case “with” the new infrastructure respect to the case “without”
it. The tool adopted is the software REMARK [17] able to assess the adequacy of generation and
transmission systems in a zonal market framework.
This tool has to consider the real network situation in which the variability of RES generation as well
as the reliability of each element in the grid are both accounted for. Additionally, the considered cases
have to be based on a “projection” to the future of the system, able to account for its evolution and its
most severe criticities. The final goal is to quantify the economic profitability of the proposed
investment (measured e.g. by the NPV index) [12].
The scenarios
In order to build the transmission network models that will be used in the analysis, the ENTSO-E 2008
STUdy Model (STUM) of continental Europe system has been used. In particular, it has been decided
to focus the study on the transmission network of 10 European countries that have significant impacts
on the EL2 region: Austria (AT), Bosnia-Herzegovina (BA), Switzerland (CH), Germany (DE),
France (FR), Croatia (HR), Italy (IT), Montenegro (ME), Serbia (RS), Slovenia (SI). The other
bordering continental Europe countries are represented with equivalent network models (i.e.
equivalent generators).
This ENTSO-E STUM provides a snapshot of the operating conditions of the ENTSO-E transmission
grid in the peak load situation in winter 2008. The STUM covers the continental Europe system and
includes about 4000 nodes and ca. 3000 loads and generators. However, the ENTSO-E STUM 2008
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provides only partial information about the technical details of elements that were connected to the
European transmission grid during winter peak 2008. In order to carry out a sound cost-benefit
analysis, a comprehensive framework of all the elements connected to the European transmission grid
is required. For this reason the ENTSO-E model has been completed with additional information about
the technical features of generators provided by project partners as well as transmission development
plans published and sources by other relevant stakeholders [12].
The aim of this data collection has been to create a comprehensive database of 2008 transmission grid
model that also includes technical details not originally present in the reference model.
In order to get an estimation of the sensitivity of the results obtained by means of the proposed
methodology, two different projections of system evolutions (optimistic and pessimistic) have been set
up for each investigated year. For this reason 6 different system models have to be prepared to perform
a cost-benefit analysis. These models describe possible evolutions of the European power system in
short term (2015), medium term (2020) and long term (2030) reference scenarios.
The 2008 transmission system model has been updated in order to build the grid model for the years
2015, 2020 and 2030. Information about the future transmission grid reinforcements that have been
included in the model are derived from ENTSO-E’s TYNDP [9] and other information provided by
TSOs involved in the project.
The growth trends of generation and load in the 2015, 2020, 2030 scenarios have been calculated
using the ENTSO-E’s System Adequacy Forecast (SAF) [15] and the REALISEGRID long term
scenarios results [6].
The benefits
The most obvious benefit deriving from transmission expansion is represented by the increase of
capacity. However, this additional capacity is not necessarily useful for the system. Only evaluating
the impact of the extra transmission capacity on social welfare (or, more simply, dispatching costs), on
CO 2 emissions, on security of supply (i.e. load shedding probability) and other correlated factors it is
possible to establish if the expansion costs are justifiable. These latter factors constitute the benefits
that must be considered in a multi-criteria cost-benefit analysis.
Considering a systemic perspective, different benefits deriving from transmission expansion to the
society can be listed. In particular, in the present study the following benefits are considered:
B1. reduction of system congestions and unlock of more efficient generation;
B2. reduction of losses;
B3. reduction of load shedding or increase of system reliability;
B4. reduction of wind curtailment;
B5. reduction of CO 2 emissions;
B6. reduction of cost for extra-EU fuels.
The cost-benefit analysis results
By comparing the results in terms of the economic impact of each single benefit (see for example
Figure 7 for Corridor A, optimistic scenario) [12], it can be noticed that the most important benefits
for each corridor are represented by the reduction of system congestions and of cost for extra-EU fuels
import. Then, the effects of some other benefits, like the improvement of system reliability and the
reduction of wind curtailment, are in all cases very limited or negligible. In fact, it emerges that the
overall EENS (Expected Energy Not Supplied) is limited and the investigated portion of the European
transmission network has proven to be sufficiently reliable over the observed timeframe. In addition,
the grid expansion over the years, within the timeline and geographic coverage of the study, has
resulted to be able to efficiently integrate the expected growth of wind power capacity.
Moreover, in the specific cases analyzed, it results that the impact of the reduction of network losses is
limited, and in some cases even negative: the latter is due to the increased NTC (Net Transfer
Capacity) between countries with different production costs, resulting in increased trade and therefore
greater exploitation of the transmission grid. Another benefit that may result to have a negative impact
is the reduction of CO 2 emissions.
This may appear awkward, but it can be explained considering two elements: i) the dispatch merit
order allows a partial replacement of more expensive gas-fuelled generation by cheaper (yet less
environmentally friendly) coal-fired production; ii) the RES (wind) capacity assumed installed over
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the observed years in the investigated regions is still limited with respect to thermal generation
capacity. The former aspect concerns especially the Italian gas-based generation replaced by German
coal-fuelled production. For the latter aspect, also the limited wind capability factor (in terms of yearly
hours) plays a role. Both elements above have their impact particularly in 2015, when the RES
penetration and the CO2 penalty tax are lower than their respective values in 2030. Also, the grid
expansion - in 2020 and especially in 2030 - allows a better RES integration by reduction of wind
curtailment.
600 000.00
500 000.00
400 000.00
300 000.00
k€
200 000.00
100 000.00
-
-100 000.00
-200 000.00
-300 000.00
B1 B2 B3 B4 B5 B6
benefits
2015
2020
2030
Figure 7: Benefits deriving from the new corridor A in 2015, 2020 and 2030 (optimistic scenario)
In the performed cost-benefit analysis, the weights to be multiplied by the benefits values are assumed
to be all equal to 1 for the benefits B1:B5 and to 0 for the benefit B6. In a sensitivity analysis, the
benefit B6 has been also included with a weight equal to 1. This allows in fact to estimate the impact
of benefit B6 on the global value. It is evident that, for all different cases and scenarios over the
timeframe horizon, B6 highly influences the total investment benefit.
By carrying out a complete cost-benefit analysis over the observed timeframe horizon, the key
parameters like the NPV and the PI (Profitability Index) have been calculated with the aim to compare
and rank the three possible investments. Table 2 summarizes the numerical values of NPV and PI for
the cases considering the B6 included or not in the two scenarios for the three corridors.
Scenario Indicator Corridor A Corridor B Corridor C
Optimistic
Pessimistic
NPV B1-B5 [M€] 1728 1342 2208
PI B1-B5 8 6 3
NPV B1-B6 [k€] 3223 2533 4682
PI B1-B6 15 12 5
NPV B1-B5 [k€] 2105 1470 2059
PI B1-B5 10 7 2
NPV B1-B6 [k€] 3658 2882 4846
PI B1-B6 18 13 6
Table 2: Profitability analysis of the three corridors
From the analysis of the results it can be noted that [12]:
• In the Optimistic scenario, Corridor C results to be the most profitable solution, preceding in the
rank Corridor A and Corridor B (in both cases with and without B6), when taking the NPV as
the evaluation indicator for the decision-making. On the other hand, by selecting the investment
based on a relative indicator like the PI, the rank order changes, seeing Corridor A as the most
convenient option followed by Corridor B and Corridor C (in both cases with and without B6).
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This rank change can be explained by the high amount of investment needed for building
Corridor C (due especially to costly GIL technology).
• In the Pessimistic scenario, in the case with B6 included, the order rank of investments is the
same as for the Optimistic scenario, i.e. Corridor C is the most convenient option, followed by
Corridor A and Corridor B, when taking NPV as decision-making indicator, while Corridor A
can be preferred over Corridor B and Corridor C considering the PI. Instead, in the case without
B6, Corridor A results the most convenient by using both indicators to base the decision,
followed by Corridor C and Corridor B or reversely, depending on the indicator adopted (NPV
or PI, respectively).
4. CONCLUSIONS
The paper has shown two new methodologies that are able, as a whole, to cover all the phases of the
transmission planning process and to provide advantages with respect to the approaches generally
adopted nowadays by the European TSOs. This is true especially in a situation that is marked by a
series of factors that increase uncertainty and can be studied only utilising advanced tools.
The trans-national models used to validate the methodologies have shown the feasibility of the overall
approach as well as highlighted some issues that should be tackled in order to develop in the future a
harmonic plan to reinforce the European backbones.
It has to be also highlighted that the models developed within this study have been prepared using
different sources of information provided by European TSOs, project partners and other relevant
public documents. However, due to the great uncertainties on some data (especially on generation), the
most important outcome of the performed studies is the validation of the two proposed methodologies
on a multinational scale. In particular, the cost-benefit methodology, set up also with the help of TSOs,
both internal to the REALISEGRID consortium and within the project stakeholders’ board, can be a
candidate, upon opportune extension, also to include further new technologies 8 , towards the realisation
of the future pan-European methodology called upon by the European Commission within the Energy
Infrastructure Package.
8 Like FACTS (Flexible AC Transmission System), HVDC (High Voltage DC), storage devices, for example.
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