Power transmission regulation in a liberalised context: an analysis of innovative solutions in South American markets

Abstract

After decades of reduced need for investment, transmission regulation is increasingly gaining relevance and complexity in liberalised power sectors, mainly due to the need to integrate sometimes distant and large-scale renewable energy sources. We identify the key principles that should be considered at three levels: transmission expansion, remuneration, and cost allocation.

The proposals we develop are built upon a review of the noteworthy experiences matured in South America, a region which, besides leading restructuring in the 1980s and 1990s, has with different levels of success always relied on innovative solutions to deal with this crucial regulatory challenge.

After decades of reduced need for investment, transmission regulation is increasingly gaining relevance and complexity in liberalised power sectors, mainly due to the need to integrate sometimes distant and large-scale renewable energy sources. We identify the key principles that should be considered at three levels: transmission expansion, remuneration, and cost allocation.

The proposals we develop are built upon a review of the noteworthy experiences matured in South America, a region which, besides leading restructuring in the 1980s and 1990s, has with different levels of success always relied on innovative solutions to deal with this crucial regulatory challenge.