One challenge facing operators of network infrastructure, such as gas pipelines and electricity grids, is that large new investments in capacity must be undertaken as overall demand increases. In the European Union alone, roughly 200 Billion Euro must be invested in the energy transport networks (gas and electricity) by 2020 (MEMO/10/582). However, there is a considerable risk that an operator’s estimates of future demand might prove too optimistic, irreversible investments would be undertaken, and some of the capacity would sit idle or underused. On the other hand, failing to expand capacity sufficiently would result in lost profits and lower welfare than under optimal capacity provision.
|Title of host publication||Financial Transmission Rights|
|Subtitle of host publication||Analysis, Experiences, and Prospects|
|Editors||T. Kristainsen, J. Rosellon|
|Place of Publication||Heidelberg Berlin|
|Number of pages||403|
|Publication status||Published - 2013|
|Name||Lecture Notes in Energy|
Henze, B., Noussair, C. N., & Willems, B. (2013). Long-term financial transportation rights: An experiment. In T. Kristainsen, & J. Rosellon (Eds.), Financial Transmission Rights: Analysis, Experiences, and Prospects (pp. 211-226). (Lecture Notes in Energy; No. 7). Springer Verlag.