Insufficient transmission network capacity reduces equalization of wholesale prices in the Nordic electricity market. This has financial impacts on, for example, electricity users. These are the findings of a doctoral dissertation examined at Lappeenranta University of Technology (LUT).
The creation of a common electricity market requires not only a market model but also an electricity transmission network with sufficient capacity. Historically speaking, transmission networks were designed to handle the internal needs of countries and the cross-border lines may be insufficient from the common market point of view. Thus, new network investments are needed. However, such large, cross-border transmission network investments are often challenging to implement, because, for example, permit processes are slow and the distribution of investment costs can be unclear.
In her dissertation, Mari Makkonen, M. Sc. (Tech.), assessed the critical factors affecting the implementation of transmission network investments. Makkonen evaluated the effects of planned by unrealised transmission network investments on the functioning of electricity markets. Makkonen's work focused particularly on Nordic electricity markets by means of various illustrative examples. Similar challenges to developing transmission networks have also been observed in other parts of Europe.
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