1. TRANSMISSION NETWORK INVESTMENT CRITERIA
10th Athens Forum, Athens, April 24-25, 2007
TRANSMISSION NETWORK INVESTMENT CRITERIA
DAVOR BAJS
GORAN MAJSTROVIC
ENERGY INSTITUTE HRVOJE POZAR, Zagreb, CROATIA
TRAJCE CEREPNALKOVSKI
NEOTEL, Skopje, MACEDONIA

2. CONTENTS INTRODUCTION EXISTING PLANNING CRITERIA
10th Athens Forum, April 24-25, Transmission network investment criteria
CONTENTS
INTRODUCTION
EXISTING PLANNING CRITERIA
NATIONAL GRID CODES AND DRAFT VERSION OF REGIONAL GRID CODES
PREREQUISITES AND ASSUMPTIONS
TRANSMISSION NETWORK INVESTMENT CRITERIA
METHODOLOGY FOR PROJECT PRIORITIZATION
CONCLUSIONS

3. INTRODUCTION 8th ATHENS FORUM THE STUDY SHOULD ANALYZE:
10th Athens Forum, April 24-25, Transmission network investment criteria
INTRODUCTION
8th ATHENS FORUM
GIS and SECI TSP updates
transmission investment criteria on regional level
list of priority projects
THE STUDY SHOULD ANALYZE:
the problem of transmission investment in an open market environment defining the most relevant uncertainties in SEE region,
review past experience on transmission network planning,
analyze transmission planning criteria which have been used by different TSO in the region,
review national grid codes and draft version of regional grid code,
suggest transmission investment criteria from regional prospective,
suggest methodology for project prioritization.

4. INTRODUCTION (cont.) TRANSMISSION PLANNING UNDER NEW CIRCUMSTANCES
10th Athens Forum, April 24-25, Transmission network investment criteria
INTRODUCTION (cont.)
TRANSMISSION PLANNING UNDER NEW CIRCUMSTANCES
different target functions
uncertainties
MOSTLY USED PLANNING CRITERIA
n-1
LOLP
NPV>0
REGIONAL PLANNING
Wrong investment because of the change in bidding behavior

5. EXISTING PLANNING CRITERIA
10th Athens Forum, April 24-25, Transmission network investment criteria
EXISTING PLANNING CRITERIA
SEE TSOs - REGULATORY AGENCIES
TRANSMISISON PLANS YEARS AHEAD
TRANSMISISON INVESTMENTS FINANCING - TRANSMISSION FEES AND LOANS. PRIVATE INVESTORS NOT ALLOWED !!!
TRANSMISSION PLANNING CRITERIA - NATIONAL GRID CODES
THE MAIN TECHNICAL CRITERION - (n-1) SECURITY CRITERION.
(n-2) CRITERION (Montenegro and Romania)
OTHER TECHNICAL CRITERIA - NOT USED (stability criteria and compensation facilities installation criteria in Romania)

6. EXISTING PLANNING CRITERIA (cont.)
10th Athens Forum, April 24-25, Transmission network investment criteria
EXISTING PLANNING CRITERIA (cont.)
PROBABILITY OF (n-1) EVENTS – NOT VALUATED
LOAD FLOW, SECURITY ANALYSIS, SHORT CIRCUIT
OPTIMAL POWER FLOWS (Bulgaria, Turkey, UNMIK), STABILITY ANALYSIS (B&H, Bulgaria, Macedonia, Romania, Turkey)
PROBABILISTIC ANALYSES - PERFORMED ONLY IN ROMANIA
ECONOMIC CRITERIA (Albania, B&H, Croatia, Macedonia, Romania, Serbia&UNMIK)
PROFITABILITY INDEX – MOSTLY USED ECONOMIC CRITERION
TYPES OF BENEFIT:
reduction of the cost of losses,
reduction of loss of load costs,
reduction of re-dispatching costs,
reduction of congestion costs,
benefit from telecommunication lines

7. EXISTING PLANNING CRITERIA (cont.)
10th Athens Forum, April 24-25, Transmission network investment criteria
EXISTING PLANNING CRITERIA (cont.)
UNDELIVERED ELECTRICITY COSTS - LOWER THAN 3 €/kWh
ADDITIONAL PLANNING CRITERIA FOR INTERCONNECTION LINES:
mostly not applied
based on system operational costs (Macedonia)
based on the difference between energy prices (Serbia)
UNCERTAINTIES (multi-scenario analysis)
new power plants size and location
generators engagement
hydrological conditions
market transactions
country power balance
NO RISK ASSESSMENTS

8. GRID CODES GRID CODES PRESCRIBE:
10th Athens Forum, April 24-25, Transmission network investment criteria
GRID CODES
GRID CODES PRESCRIBE:
TSOs obligations related to transmission system planning reports and studies
the role of the transmission systems (reliable and secure system operation and continuous load supply)
planning criteria
input data
REGIONAL ASPECTS ARE NOT MENTIONED IN NATIONAL GRID CODES
THE USAGE OF (n-1) CRITERION
(explanation of that criterion is very similar between countries and not permitted consequences of single outages are pretty much the same)
OTHER TECHNICAL CRITERIA LIKE SHORT-CIRCUIT OR STABILITY CRITERIA ARE PRESCRIBED SOMEWHERE.
TRANSMISSION INVESTMENTS ECONOMIC RATIONALIZATION - NOT MENTIONED IN NATIONAL GRID CODES
(except in general term in Bosnian and Romanian grid codes)

9. 10th Athens Forum, April 24-25, 2007 Transmission network investment criteria
GRID CODES (cont.)
PROBABILISTIC TECHNICAL CRITERIA FOR TRANSMISSION SYSTEM PLANNING - only in Romanian and Turkish grid codes (loss of load probability)
NO GREAT DISPROPORTIONS BETWEEN NATIONAL GRID CODES AND REGIONAL GRID CODE
DRAFT VERSION OF REGIONAL GRID CODE - CREATION OF WORKING GROUP
(plan the network on regional level, especially directing attention on interconnection lines and those internal lines that have great impact on transfer capacities between different countries)
MARKET ISSUES IN TRANSMISSION PLANNING ARE NOT SATISFACTORY TREATED
planning uncertainties
economic considerations of transmission investments
balance between security and costs
promotion of the private financing
congestion costs

10. PREREQUISITES AND ASSUMPTIONS
10th Athens Forum, April 24-25, Transmission network investment criteria
PREREQUISITES AND ASSUMPTIONS
UNIFIED REGIONAL ELECTRICITY MARKET
UNIQUE NETWORK
PROMOTION OF THE MARKET ACTIVITIES
IDENTIFICATION AND PRIORITIZATION OF THE TRANSMISSION INVESTMENT CANDIDATES FROM REGIONAL POINT OF VIEW
STABLE REGULATORY FRAMEWORK
CO-ORDINATION BETWEEN SEE TSOs (technical standards, balancing rules and congestion management mechanisms)
ELECTRICITY MARKET ORGANIZED THROUGH POOL AND BILATERAL CONTRACTS
PRODUCTION COMPANIES WILL GIVE THEIR BIDS TO THE POOL AT REGIONAL LEVEL

11. PREREQUISITES AND ASSUMPTIONS (cont.)
10th Athens Forum, April 24-25, Transmission network investment criteria
PREREQUISITES AND ASSUMPTIONS (cont.)
ELECTRICITY PRICE - market oriented across the region and not significantly dependent on the location in the SEE grid
THE MOST IMPORTANT UNCERTAINTIES:
new power plants size and locations
hydrological conditions
generators bids
branches and generators availability
load prediction
regional power balance
THE PROBLEM OF INVESTMENTS FINANCING
THE TREATMENT OF INTERCONNECTION LINES AND INTERNAL NATIONAL LINES HAVE TO BE THE SAME

12. TRANSMISSION NETWORK INVESTMENT CRITERIA
10th Athens Forum, April 24-25, Transmission network investment criteria
TRANSMISSION NETWORK INVESTMENT CRITERIA
2 SET OF CRITERIA:
technical
economic
TECHNICAL CRITERIA:
(n-1) criterion
voltage and reactive power criterion
short-circuit criterion
stability criterion
ECONOMIC CRITERION - PROFITABILITY INDEX (cost/benefit ratio)

13. TRANSMISSION NETWORK INVESTMENT CRITERIA (cont.)
10th Athens Forum, April 24-25, Transmission network investment criteria
TRANSMISSION NETWORK INVESTMENT CRITERIA (cont.)
Planning time-frame
Topology
Analyzed operating conditions
Technical criteria satisfaction
Permitted corrective actions
Short
All branches and generators available (n)
SEE peak load
SEE minimum load
(1-3 years horizon)
Ilines < Imax lines*
Umin < Unode < Umax
Stability criteria
Short-circuit criteria
- automatic transformers regulation
- switching of compensation devices
- network sectioning
One branch (line, transformer) or generator or compensation device unavailable (n-1)
Ilines < Imax lines**
- generators re-dispatching***
- automatic and manual transformers regulation
Mid
(5 years horizon)
Long
(10 years horizon)

14. TRANSMISSION NETWORK INVESTMENT CRITERIA (cont.)
10th Athens Forum, April 24-25, Transmission network investment criteria
TRANSMISSION NETWORK INVESTMENT CRITERIA (cont.)
TYPES OF BENEFIT:
benefit due to reduction of expected annual undelivered electricity costs
benefit due to annual losses reduction
benefit due to reduction of annual re-dispatching costs
benefit due to annual congestion costs reduction
TYPES OF COSTS:
investment costs
operation and maintenance costs
PIi > 1

15. METHODOLOGY FOR PROJECT PRIORITIZATION
10th Athens Forum, April 24-25, Transmission network investment criteria
METHODOLOGY FOR PROJECT PRIORITIZATION
LIST OF CANDIDATE PROJECTS
TECHNICAL ANALYSIS
REVIEWED LIST OF CANDIDATE PROJECTS
ECONOMIC ANALYSIS
PRIORATIZATION:
technical
economic

16. METHODOLOGY FOR PROJECT PRIORITIZATION (cont.)
10th Athens Forum, April 24-25, Transmission network investment criteria
METHODOLOGY FOR PROJECT PRIORITIZATION (cont.)
CANDIDATE PROJECTS ARE TECHNICALLY PRIORITIZED ACCORDING TO NETWORK CONSTRAINTS THAT ARE REMOVED BY CANDIDATE PROJECTS:
first importance group: candidate projects that remove network constraints with (n) available branches
second importance group: candidate projects that remove network constraints with (n-1) available branches
FURTHER TECHNICAL PRIORITIZATION IS MADE ACCORDING TO:
the number of planning scenarios in which candidate project removes network constraints
voltage level of overloaded transmission lines
the number of network constraints that are removed by a candidate project
EVALUATION AND PRIORITIZATION OF CANDIDATE PROJECTS ACCORDING TO THE ECONOMIC CRITERIA IS BASED ON THE MAXIMUM AVERAGE PROFITABILITY INDEXES

17. 10th Athens Forum, April 24-25, 2007 Transmission network investment criteria
CONCLUSIONS
PLANNING CRITERIA USED BY SEE TSOs TODAY ARE GENERALLY SIMILAR AND MAINLY CONCENTRATED AROUND (N-1) SECURITY CRITERION
MARKET ORIENTED TRANSMISSION INVESTMENTS AND INVESTMENTS FROM REGIONAL PERSPECTIVE ARE NOT MENTIONED AND SATISFACTORY TREATED IN NATIONAL GRID CODES
NATIONAL TRANSMISSION NETWORKS ARE MAINLY PLANNED ACCORDING TO TECHNICAL CONSIDERATIONS AND ECONOMIC RATIONALIZATION OF NEW INVESTMENTS GENERALLY REMAINS OUT OF INTEREST
METHODS USED BY TRANSMISSION PLANNERS ARE BASED ON DETERMINISTIC APPROACH, WHILE PROBABILITIES OF DIFFERENT EVENTS ARE NOT TREATED SATISFACTORY WHICH DOESN’T ALLOW BETTER ECONOMICAL CONSIDERATIONS OF NETWORK DEVELOPMENT AND INCLUSION OF ECONOMIC CRITERIA INTO DECISION MAKING PROCESS
SEE TRANSMISSION SYSTEM PLANNING PROCESS HAS TO INCLUDE DIFFERENT UNCERTAINTIES WHICH WILL OCCUR IN AN OPEN ELECTRICITY MARKET ENVIRONMENT

18. 10th Athens Forum, April 24-25, 2007 Transmission network investment criteria
CONCLUSIONS (cont.)
TRANSMISSION DEVELOPMENT IN SEE MAY BE MORE EFFECTIVE AND FASTER IF FOLLOWING REQUESTS ARE TO BE FULFILLED:
full independency of Transmission System Operators from production and supply companies
acceleration of national authorization procedures for transmission facilities construction
effective market design and stable regulatory framework
introduction of market oriented signals for transmission investments
attraction of private investments into transmission development
coordination and full cooperation between SEE TSO’s in planning issues and
establishment of stable financing mechanism that will support regionally important projects
OFFICIAL REGIONAL TRANSMISSION PLANNING GROUP
SEE transmission system issues
collection of planning data
planning scenarios
common network models preparation (load flow, dynamic, short-circuit, probabilistic models)
analyses
comparison of candidate projects and defined criteria
prioritization of the investments
preparation of reports concerning SEE transmission system future bottlenecks
congestion predictions and development suggestions

19. THANK FOR YOUR ATTENTION ENERGY INSTITUTE HRVOJE POZAR
10th Athens Forum, April 24-25, Transmission network investment criteria
THANK FOR YOUR ATTENTION
DAVOR BAJS
ENERGY INSTITUTE HRVOJE POZAR
ZAGREB, CROATIA