Economic analysis of transmission enhancement through merchant projects

摘要: The lack of economic incentives and uncertainties in recovering the cost a merchant / transmission project is an area great concern as aging heavy loading conditions limit capability U.S. networks. Merchant projects are envisioned market based solutions to enhance power grid import cheaper energy from suppliers other areas. However, due electric market, recovery mechanisms have not been successful guaranteeing full investment. As result, few built. This dissertation presents comprehensive analysis required that necessary grid. concept perpetual options theory initially introduced analyze investment through approved rate. Since usages associated revenue stochastic nature, applying allows investor determine most opportunistic time start obtain maximum returns or let option expire when incentive sufficient. In today's environment, this decision approach more appropriate since it provides investors better evaluation its return on exit strategy for probability capital with exercise build calculated using Kolmogorov forward equation. risk needed making assessing encourage