Reliability standards and generation adequacy assessments for interconnected electricity systems

Auteurs

Nicolas Astier, Marten Ovaere

Astract

This paper studies the use of national reliability standards, defined as loss of load expectation (LOLE) targets, in generation adequacy assessments when electricity systems are interconnected. We show that enforcing autarky reliability standards may still reach the welfare optimum in the presence of interconnections, but only under two conditions. First, installed generation capacities should be determined jointly, while considering the full power system. Second, LOLE calculations should fully internalize external adequacy benefits occurring in neighboring systems. Counter-intuitively, LOLE levels computed in adequacy assessment simulations should differ from their realized levels. We run a numerical application for a set of European countries and find that existing interconnections may lead to generation adequacy benefits of around one billion euros per year, by enabling a 18.9 GW decrease in generation capacity. In our case study, regional coordination is found to be more important than fully internalizing external reliability benefits in adequacy simulations.