Long-term financial transportation rights

An experiment

B. Henze, C.N. Noussair, Bert Willems

Research output: Chapter in Book/Report/Conference proceedingChapterScientificpeer-review

Abstract

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.
Original languageEnglish
Title of host publicationFinancial Transmission Rights
Subtitle of host publicationAnalysis, Experiences, and Prospects
EditorsT. Kristainsen, J. Rosellon
Place of PublicationHeidelberg Berlin
PublisherSpringer Verlag
Pages211-226
Number of pages403
ISBN (Print)9781447147862
Publication statusPublished - 2013

Publication series

NameLecture Notes in Energy
Number7

Fingerprint

Experiment
Electricity
Gas
Operator
Grid
European Union
Optimal capacity
Profit
Irreversible investment
Energy

Cite this

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). Heidelberg Berlin: Springer Verlag.
Henze, B. ; Noussair, C.N. ; Willems, Bert. / Long-term financial transportation rights : An experiment. Financial Transmission Rights: Analysis, Experiences, and Prospects. editor / T. Kristainsen ; J. Rosellon. Heidelberg Berlin : Springer Verlag, 2013. pp. 211-226 (Lecture Notes in Energy; 7).
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Henze, B, Noussair, CN & Willems, B 2013, Long-term financial transportation rights: An experiment. in T Kristainsen & J Rosellon (eds), Financial Transmission Rights: Analysis, Experiences, and Prospects. Lecture Notes in Energy, no. 7, Springer Verlag, Heidelberg Berlin, pp. 211-226.

Long-term financial transportation rights : An experiment. / Henze, B.; Noussair, C.N.; Willems, Bert.

Financial Transmission Rights: Analysis, Experiences, and Prospects. ed. / T. Kristainsen; J. Rosellon. Heidelberg Berlin : Springer Verlag, 2013. p. 211-226 (Lecture Notes in Energy; No. 7).

Research output: Chapter in Book/Report/Conference proceedingChapterScientificpeer-review

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N2 - 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.

AB - 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.

M3 - Chapter

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T3 - Lecture Notes in Energy

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BT - Financial Transmission Rights

A2 - Kristainsen, T.

A2 - Rosellon, J.

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Henze B, Noussair CN, Willems B. Long-term financial transportation rights: An experiment. In Kristainsen T, Rosellon J, editors, Financial Transmission Rights: Analysis, Experiences, and Prospects. Heidelberg Berlin: Springer Verlag. 2013. p. 211-226. (Lecture Notes in Energy; 7).