Merchant Electricity Transmission Expansion: A European Case Study

We apply a merchant transmission expansion model to the trilateral market coupling arrangement among the Netherlands, Belgium and France as a generic example, and note that it can be applied to any general market splitting or coupling of different national power markets in Europe. In this merchant transmission expansion framework, the system operator allocates financial transmission rights (FTRs) to investors in transmission expansion depending on their preferences and revenue adequacy. We study the case for FTRs in Europe including incentives for investors in transmission expansion.