Model based evaluation of electricity network investments in Central Eastern Europe

Abstract

The paper analyses the complex welfare impacts of proposed transmission investments in the Central Eastern Europe (CEE) region with the application of the EEMM electricity model. This assessment is made at regional level, as new transmission lines have significant spill-over effects over third countries. We carry out a cost-benefit assessment (CBA) focused on the CEE region and demonstrate, that the EEMM model is a suitable tool to carry out such assessment that can satisfy the EU requirements in the field. Using a simplified cost-benefit analysis – limited by the available information on the projects – we mimic the process of identifying those transmission lines that increase the regional welfare the most. In addition, the paper also identifies those methodological and policy issues, that have significant impact on the results, and must be applied consistently during the evaluation process in order to gain robust results in the applied CBA method. Our results indicate that new infrastructure elements cause significant and asymmetric wealth redistribution among group of stakeholders and between countries as well. Interactions between planned transmission line developments must be identified, as they could significantly change the benefits of those lines connecting the interlinked markets.