Marginal Value of Transmission Network Expansion for Resource Adequacy

The transmission grid underpins a stable and reliable electricity supply, avoiding blackouts or brownouts. It is crucial for resource adequacy because it enables the transfer of electricity from areas of surplus generation to areas of high demand, ensuring that power is available where and when needed. Most current AC grids are meshed networks where congestion on a single branch can limit the volume of imports available to zones experiencing shortfalls. This paper proposes a quantification framework for the marginal value of transmission network expansion associated with the change in expected shortfall magnitudes. Based on this framework, we show that network expansion can be a cost-effective alternative to generation investment in addressing the security of supply-related concerns. Our framework uses linear power flow models to constrain a numerical optimization algorithm to minimize energy not served in a Monte Carlo framework. We use the optimization results to examine congestion patterns during scarcity to understand the likelihood that branch capacity limits worsen shortfalls by limiting flows. The dual variables associated with individual constraints quantify the marginal value of expanding capacity and are compiled into individual branch-level adequacy indicators. We anticipate our paper to serve as a starting point for a more sophisticated discussion on the role of the transmission network for adequacy studies, the impact of trade restrictions and, more broadly, on European market design.