Pricing electric-power transmission: The Swedish methodology and a new approach

Electricity systems are changing rapidly worldwide, and transmission pricing needs to adapt. As renewable energy production increases, it is vital that the costs for transmission are recovered while recognising the special characteristics of different energy sources. In this paper, a new transmission pricing approach is presented and compared to the approach currently used in Sweden. By calculating nodal transmission tariffs based on marginal transmission costs and incorporating uncertainty in demand and generation, the new approach caters for a changing electricity system. To assess their impacts on renewable energy production, the two methodologies are applied to a case study mimicking the Swedish system with an increased wind power penetration. The results show that location and generation type can strongly influence the transmission tariffs, and that charging renewable energy producers less could be a least-cost option.