A Research On The Decision Of Merchant Transmission Investment

According to the traditional view, the transmission investment should be carried on under regulation, but should not be based on the open market. However, the merchant transmission investment is become reality gradually. But the research of transmission investment decision are based on the regulation in the past, they analyze the decision using A-J effect or the game between regulatory agencies and investors, cost recovery depend on regulation policy, it's unnecessary to consider the recovery of the investment, but to determine the optimal level of investment to minimize operating costs. The biggest difference of merchant transmission investment decision is that it's profits are depend on marketing competition and investors must undertake all the risk of investment projects, such as real-time price changes, the uncertain of regulation terms and so on. Investment cost could recovery or not is decided completely by the changes of marketing competition and policy.The paper analyzed these risk factors the merchant transmission investors will meet, constructing the merchant investment decision-making model. First considering the long-term financial transmission rights mechanism, the main task is calculate expectations change of investors'income caused by changes in demand and supply, then investment decisions could be made based on comparing the transmission investment income and the operating costs. Long-term financial transmission rights regulations may be imperfect, then the purchase price and transmission of the electricity will determined by the generation strategy directly, so investors make their own investment decisions according to the optimal wheel of generation. As technology advancing and market factors changing, the regulators is likely to make changes in regulatory, this paper consider these risk factors into the investors function of income directly, then we establish the risk decision model of investment. We calculate the expectations and variance of the investment income using the statistics to analyze the investment risk, establish some economic models helping investors to make the investment decision.