Grid-Enhancing Technologies Participation in FTR Auctions

The increasing need for flexibility and transfer capability of the future electricity grid has brought grid-enhancing technologies into the spotlight. Steeply growing intermittent en-ergy sources, besides the large fleet of electric vehicles increasing electricity demand on the other side, have created new congestion patterns that cannot be addressed solely by grid expansion. However, the economy of scale and regulated rate of return for transmission system investments provide minimal incentives for enhancing the grid. This paper introduces a competitive incentive mechanism in which grid-enhancing technology investors are reimbursed by the increment they bring to financial transmission right auction revenues. After solving the linearized version of the auction co-optimization with the grid-enhancing technologies, the payments are based on each technology's marginal value of susceptance, capacity, or voltage phase adjustment. The method is illustrated on a stylized 3-bus system, and the numerical simulations on a 30-bus system show the effectiveness of the method and revenue adequacy.