Optimal transmission investment with regulated incentives based upon forward considerations of firm and intermittent resources with batteries

Khastieva, D, Mohammadi, S, Hesamzadeh, M R and Bunn, D W (2021) Optimal transmission investment with regulated incentives based upon forward considerations of firm and intermittent resources with batteries. IEEE Transactions on Power Systems, 36 (5). pp. 4420-4434. ISSN 0885-8950

Abstract

Regulatory support for transmission investment by private investors follows a complex process of dialogue, information sharing, commitments, and incentives. Whilst this process has attracted substantial research, the formulation of efficient solutions still remains an open question and this has become more complex with the emergence of new intermittent and battery-storage resources. We propose an optimal incentive solution in which the private transmission company earns congestion rents and an incentive fee, set by agreement with the regulator. This fee is set in the context of assessing the impact of current and future generation resources (conventional, intermittent, and batteries) on the congestion rents. The welfare-optimizing solution follows from a mixed integer, nonlinear, bilevel optimization problem, which is computationally challenging. We re-cast the problem for tractability and devise a disjunctive-based decomposition algorithm. Its performance has been successfully demonstrated on two standard IEEE case studies.