Transmission use of system charging for differentiating long-term impacts from various generation technologies

This paper proposes a novel transmission use of system (TUoS) charging method, which is able to 1) acknowledge the trade-offs between short-run congestion cost and long-run investment cost when justifying economic network investment, 2) identify the impacts of different generation technologies on congestion cost and network investment, and 3) translate these impacts into economically efficient TUoS tariffs that differentiate generation technologies. An incremental capacity change from a generator will impact the congestion costs at each branch, which is then translated into the impacts on investment time horizons. The difference in the present values with and without the incremental change for a branch is its long-run incremental cost (LRIC). The final TUoS tariff for this generator is the sum of all LRIC triggered by its capacity increment. The proposed method is demonstrated on a modified IEEE 14-bus system to show its effectiveness over the traditional approach. Results show that it can provide cost-reflective TUoS tariffs for different generation technologies at the same sites by examining their respective impacts on congestion and investment. It thus can incentivize appropriate generation expansion to reduce congestion costs and ultimately network investment cost.