Policy Evaluation of Cross-Regional Interconnection Lines in the Electricity Market
This program studies the interconnection lines in the Japanese power system. Interconnection lines are the high-voltage transmission lines that connect areas under the jurisdiction of transmission and distribution companies. The electricity network has the technical feature that the amount of supply and demand must be constantly matched. Otherwise, the frequency will change drastically, and there will be a risk of blackouts. In addition, future electricity networks will face new challenges of more severe natural disasters due to climate change and the massive introduction of renewable energy essential for the realization of a decarbonized society.
The use of interconnection lines contributes to a stable power system robust against natural disasters and accidents and realizes a least-cost power supply. However, the inter-regional transfer of energy through interconnections has been historically limited in Japan because incumbent vertically integrated electric power companies—former regional monopolies—were mostly self-sufficient in meeting demand in their respective regions before the Great East Japan Earthquake. In this research program, I will evaluate how efficiently Japan’s interconnection lines are being utilized by estimating the effect of implicit auctions implemented after the earthquake.