The challenges of transmission expansion in the Chilean power sector: market or central planning?

Transcription

1 Pontificia Universidad Católica de Chile Departamento de Ingeniería Eléctrica The challenges of transmission expansion in the Chilean power sector: market or central planning? Hugh Rudnick IEEE PES 2004 General Meeting Toronto, June 2004 CHILE (2002) GWh MW 31 generator companies, 5 transmission companies and 36 distribution companies 1

2 Transmission systems -two longitudinal networks with 500 and 220 kv lines (SIC and SING) -two isolated small systems -no interconnections among them nor with other countries SING (800 km, 3645 MW)) SIC (2200 km, 6733 MW) AISEN MAGALLANES SING 2

3 SIC 3

4 Chile deregulation 1982 deregulation Central dispatch by operator CDEC (Centro de Despacho Económico de Carga) Economic dispatch defines hourly marginal cost Marginal cost transactions among generators Only generators have access to spot market Contracts are financial hedges No legal separation between generation and transmission activities Transmission regulation No legal monopoly, anybody can do transmission Originally, largest generator owner of transmission Antimonopoly commission forces transmission separation Market oriented transmission regulation Open access obligation Only generators pay for transmission Two part transmission pricing 4

5 Transmission pricing First part: incremental income resulting from nodal price differences p 1 p 2 E 1 E 2 Incremental income= E 2 p 2 -E 1 p 1 Transmission pricing Second part: wheeling to pay for difference to cover annual replacement value + operation & maintenance Wheeling based on use of system approach with area of influence concept N S Adittional payment Basic payment (area of influence) 5

6 Transmission pricing Pro rata payments based on flow allocation Distribution factor concept (as only generators pay, GGDF apply) Economic rationality Users who demand transmission capacity pay for it Generator investments must take location (and transmission) into consideration No free riding of postage stamp scheme Transmission pricing Regulation as set of negotiation rules between generators using system and transmission owner, rather than published transmission rates Two party negotiations with no coherency checks for the global system High transaction costs Barriers of entry to new investors Remuneration risks (over or under payments) No social optimum orientation 6

7 Transmission pricing Transmission expansion The wholesale market rules transmission expansion Expansion linked to generator investments Expansion needs originated by demand growth are not necessarily fulfilled Under investment No simple solutions to congestion problems 7

8 System expansion SIC generation capacity grows 4.4% p.a. SING generation capacity grows 10.7% p.a. High voltage transmission grows 3.7% p.a. in SIC 14.9% p.a. in SING Transmission expansion approaches Market approaches * Centralized planning approaches (the regulator defining an expansion plan) The question of demand participation *The Argentina model of majority building plus public tenders for expansion lines. *Game theory approaches could provide tools 8

9 Who should pay for transmission? Proportion of transmission payment Country Colombia Bolivia Peru Argentina United Kingdom Spain Canada Generation 0% 25% 0% 54% 23% 50% 50% Demand 100% 75% 100% 46% 77% 50% 50% A new law (March 2004) Explicit separation between transmission and other agents Transmission values set by regulator and tariffs set by system operator Remuneration of all transmission assets Payment based on use of system approach, but incorporating demand Payments rates published every year Expert council solves conflicts among agents 9

10 A new law depends on flows ALFALFAL 80% generation 20% demand PEHUENCHE PANGUE RALCO depends on flows NELTUME PETROHUE CANUTILLAR A new law Transmission expansion oriented by planning study done every four years Regulatory supervision Alternative expansion plans developed Operator annually tests coherency and decides expansions Public tenders for new lines Fines for not complying 10

11 Hugh Rudnick Department of Electrical Engineering Pontificia Universidad Católica de Chile Santiago, Chile 11