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A Principal-Agent Approach to Transmission Expansion—Part II: Case Studies

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3 Author(s)
Molina, J.D. ; Electr. Eng. Dept., Pontificia Univ. Catolica de Chile, Santiago, Chile ; Contreras, J. ; Rudnick, H.

This paper is the second of a two-paper series and presents a model to assess and promote investment projects defined in a plan of expansion of the transmission. We propose a model that consists of three main elements: valuation of a project based on the design of a linear contract, a principal-agent model to assess the optimal effort of an agent, and the right-of-way negotiating cost. We also define a model to evaluate bids by the agents. The value of the project depends on the number of competitors, the incentives to invest, and the right-of-way costs. The right-of-way cost is approached from the perspective of a bilateral bargaining problem.

Published in:

Power Systems, IEEE Transactions on  (Volume:28 ,  Issue: 1 )