Locational impact and network costs of energy transition: Introducing geographical price signals for new renewable capacity

Abstract

Electricity systems are facing a massive transformation from the replacement of conventional generation technologies by renewables. In this paper, we explore how to make compatible markets principles, economic signals and grid development through the analysis of the grid-related costs associated with the connection of new renewables. Starting from the actual locational patterns of the transmission congestions as baseline, we evaluate the locational impacts, the corresponding network investments and electricity losses associated with the introduction of new renewable (wind and solar) capacity and facing out existent (coal and nuclear) in a real electricity system. Simulated geographical scenarios following the Spanish National Energy and Climate Plan are used to explore up to what extent the potential locations of new generation plants might result in congestions that require relevant grid reinforcements and extra electricity losses, both borne by consumers.