Considerations for Economic Regulation Amendments to Incentivize Flexibility Utilization in the Finnish Transmission System

Antti Kuusela; Antero Reilander; Suvi Peltoketo; Antti-Juhani Nikkilä; Pertti Järventausta

doi:10.1109/EEM58374.2023.10161867

Considerations for Economic Regulation Amendments to Incentivize Flexibility Utilization in the Finnish Transmission System

Antti Kuusela, Antero Reilander, Suvi Peltoketo, Antti-Juhani Nikkilä, Pertti Järventausta

Sähkötekniikka

Tutkimustuotos: Konferenssiartikkeli › Tieteellinen › vertaisarvioitu

2 Sitaatiot (Scopus)

13 Lataukset (Pure)

Abstrakti

This paper provides considerations for economic regulation amendments to incentivize flexibility utilization in the Finnish transmission system. An investment deferral shall produce higher economic efficiency if the incurred costs of flexibility utilization are lower than the costs of a comparable investment during the evaluation period while the increase of service output remains the same. The analysis in this paper evaluates costs and benefits for a transmission system operator, connecting party and society in the regulatory regime applied in Finland. Incentives for flexibility utilization are missing from the current revenue capped rate of return regulation. The analysis results show that beneficiaries of flexibility utilization in the current regulation are the society and connecting party while TSO's efforts to defer an investment would have negative economic impact on its profit. Therefore, amendments to the economic regulation methodology are proposed to incentivize flexibility utilization when total welfare is increased.

Alkuperäiskieli	Englanti
Otsikko	2023 19th International Conference on the European Energy Market, EEM 2023
Kustantaja	IEEE
Sivumäärä	6
ISBN (elektroninen)	9798350312584
ISBN (painettu)	9798350324525
DOI - pysyväislinkit	https://doi.org/10.1109/EEM58374.2023.10161867
Tila	Julkaistu - 2023
OKM-julkaisutyyppi	A4 Artikkeli konferenssijulkaisussa
Tapahtuma	International Conference on the European Energy Market - Lappeenranta, Suomi Kesto: 6 kesäk. 2023 → 8 kesäk. 2023

Julkaisusarja

Nimi	International Conference on the European Energy Market
ISSN (painettu)	2165-4077
ISSN (elektroninen)	2165-4093

Conference

Conference	International Conference on the European Energy Market
Maa/Alue	Suomi
Kaupunki	Lappeenranta
Ajanjakso	6/06/23 → 8/06/23

Rahoitus

ACKNOWLEDGEMENT This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 957739. This project has received funding from the European Union’s Horizon This project has received funding from the European Union's Horizon 2020 research and innovation programme under grant agreement No 957739.

Julkaisufoorumi-taso

Jufo-taso 1

!!ASJC Scopus subject areas

Marketing
Energy Engineering and Power Technology
Fuel Technology

Pääsy asiakirjaan

10.1109/EEM58374.2023.10161867

20230509_Considerations for Economic Regulation Amendments to Incentivize Flexibility Utilization in the Finnish Transmission System editv
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Accepted author manuscript, 216 KBLisenssi: Unspecified

https://urn.fi/URN:NBN:fi:tuni-202310319268Lisenssi: Unspecified

Siteeraa tätä

Kuusela, A., Reilander, A., Peltoketo, S., Nikkilä, A.-J., & Järventausta, P. (2023). Considerations for Economic Regulation Amendments to Incentivize Flexibility Utilization in the Finnish Transmission System. teoksessa 2023 19th International Conference on the European Energy Market, EEM 2023 (International Conference on the European Energy Market). IEEE. https://doi.org/10.1109/EEM58374.2023.10161867

@inproceedings{5acdd57c6f3b481c86c6d41c59785106,

title = "Considerations for Economic Regulation Amendments to Incentivize Flexibility Utilization in the Finnish Transmission System",

abstract = "This paper provides considerations for economic regulation amendments to incentivize flexibility utilization in the Finnish transmission system. An investment deferral shall produce higher economic efficiency if the incurred costs of flexibility utilization are lower than the costs of a comparable investment during the evaluation period while the increase of service output remains the same. The analysis in this paper evaluates costs and benefits for a transmission system operator, connecting party and society in the regulatory regime applied in Finland. Incentives for flexibility utilization are missing from the current revenue capped rate of return regulation. The analysis results show that beneficiaries of flexibility utilization in the current regulation are the society and connecting party while TSO's efforts to defer an investment would have negative economic impact on its profit. Therefore, amendments to the economic regulation methodology are proposed to incentivize flexibility utilization when total welfare is increased.",

keywords = "congestion management, economic regulation, flexibility incentive, investment deferral, on-demand flexibility",

author = "Antti Kuusela and Antero Reilander and Suvi Peltoketo and Antti-Juhani Nikkil{\"a} and Pertti J{\"a}rventausta",

note = "Funding Information: ACKNOWLEDGEMENT This project has received funding from the European Union{\textquoteright}s Horizon 2020 research and innovation programme under grant agreement No 957739. Funding Information: This project has received funding from the European Union{\textquoteright}s Horizon Funding Information: This project has received funding from the European Union's Horizon 2020 research and innovation programme under grant agreement No 957739. Publisher Copyright: {\textcopyright} 2023 IEEE.; International Conference on the European Energy Market ; Conference date: 06-06-2023 Through 08-06-2023",

year = "2023",

doi = "10.1109/EEM58374.2023.10161867",

language = "English",

isbn = "9798350324525",

series = "International Conference on the European Energy Market",

publisher = "IEEE",

booktitle = "2023 19th International Conference on the European Energy Market, EEM 2023",

address = "United States",

}

Kuusela, A, Reilander, A, Peltoketo, S, Nikkilä, A-J & Järventausta, P 2023, Considerations for Economic Regulation Amendments to Incentivize Flexibility Utilization in the Finnish Transmission System. julkaisussa 2023 19th International Conference on the European Energy Market, EEM 2023. International Conference on the European Energy Market, IEEE, International Conference on the European Energy Market, Lappeenranta, Suomi, 6/06/23. https://doi.org/10.1109/EEM58374.2023.10161867

Considerations for Economic Regulation Amendments to Incentivize Flexibility Utilization in the Finnish Transmission System. / Kuusela, Antti; Reilander, Antero; Peltoketo, Suvi et al.
2023 19th International Conference on the European Energy Market, EEM 2023. IEEE, 2023. (International Conference on the European Energy Market).

Tutkimustuotos: Konferenssiartikkeli › Tieteellinen › vertaisarvioitu

TY - GEN

T1 - Considerations for Economic Regulation Amendments to Incentivize Flexibility Utilization in the Finnish Transmission System

AU - Kuusela, Antti

AU - Reilander, Antero

AU - Peltoketo, Suvi

AU - Nikkilä, Antti-Juhani

AU - Järventausta, Pertti

N1 - Funding Information: ACKNOWLEDGEMENT This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 957739. Funding Information: This project has received funding from the European Union’s Horizon Funding Information: This project has received funding from the European Union's Horizon 2020 research and innovation programme under grant agreement No 957739. Publisher Copyright: © 2023 IEEE.

PY - 2023

Y1 - 2023

N2 - This paper provides considerations for economic regulation amendments to incentivize flexibility utilization in the Finnish transmission system. An investment deferral shall produce higher economic efficiency if the incurred costs of flexibility utilization are lower than the costs of a comparable investment during the evaluation period while the increase of service output remains the same. The analysis in this paper evaluates costs and benefits for a transmission system operator, connecting party and society in the regulatory regime applied in Finland. Incentives for flexibility utilization are missing from the current revenue capped rate of return regulation. The analysis results show that beneficiaries of flexibility utilization in the current regulation are the society and connecting party while TSO's efforts to defer an investment would have negative economic impact on its profit. Therefore, amendments to the economic regulation methodology are proposed to incentivize flexibility utilization when total welfare is increased.

AB - This paper provides considerations for economic regulation amendments to incentivize flexibility utilization in the Finnish transmission system. An investment deferral shall produce higher economic efficiency if the incurred costs of flexibility utilization are lower than the costs of a comparable investment during the evaluation period while the increase of service output remains the same. The analysis in this paper evaluates costs and benefits for a transmission system operator, connecting party and society in the regulatory regime applied in Finland. Incentives for flexibility utilization are missing from the current revenue capped rate of return regulation. The analysis results show that beneficiaries of flexibility utilization in the current regulation are the society and connecting party while TSO's efforts to defer an investment would have negative economic impact on its profit. Therefore, amendments to the economic regulation methodology are proposed to incentivize flexibility utilization when total welfare is increased.

KW - congestion management

KW - economic regulation

KW - flexibility incentive

KW - investment deferral

KW - on-demand flexibility

U2 - 10.1109/EEM58374.2023.10161867

DO - 10.1109/EEM58374.2023.10161867

M3 - Conference contribution

AN - SCOPUS:85165228082

SN - 9798350324525

T3 - International Conference on the European Energy Market

BT - 2023 19th International Conference on the European Energy Market, EEM 2023

PB - IEEE

T2 - International Conference on the European Energy Market

Y2 - 6 June 2023 through 8 June 2023

ER -

Kuusela A, Reilander A, Peltoketo S, Nikkilä AJ, Järventausta P. Considerations for Economic Regulation Amendments to Incentivize Flexibility Utilization in the Finnish Transmission System. julkaisussa 2023 19th International Conference on the European Energy Market, EEM 2023. IEEE. 2023. (International Conference on the European Energy Market). doi: 10.1109/EEM58374.2023.10161867

Considerations for Economic Regulation Amendments to Incentivize Flexibility Utilization in the Finnish Transmission System

Abstrakti

Julkaisusarja

Conference

Rahoitus

Julkaisufoorumi-taso

!!ASJC Scopus subject areas

Pääsy asiakirjaan

Sormenjälki

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