Optimal transmission expansion planning in the context of renewable energy integration policies

This paper assesses the extent to which a renewables-driven expansion of the transmission system infrastructure impacts the total generation mix in the decentralised energy market. For that, we employ an optimisation bi-level model in which a welfare-maximizing transmission system operator makes investments in transmission lines at the upper level while considering power market dynamics at the lower level. To account for the deregulated energy market structure, we assume that the generation companies at the lower level make capacity investments as price-takers in perfect competition. Considering alternative transmission infrastructure expansion budgets, carbon emission taxes and monetary incentives for renewable generation capacity expansion, we study how alternative compositions of these factors affect the share of renewable generation in the generation mix. We apply the proposed modelling assessment to an illustrative three-node instance and a case study considering a simplified representation of the energy system of the Nordic and Baltic countries. Our results suggest the limited efficiency of the three measures when applied individually. Nevertheless, when applied together, these three measures demonstrated a positive impact on Nordics' and Baltics' energy system welfare, renewable share, and total generation. However, the amplitude of this impact differs depending on the composition of values used for the three measures.