Multi Regional Trade

[vsaini]

Dear Dr. Antti,

Greetings of the day.

I have a query regarding addition of transmission cost as revenue earned.

Background: In AnswerTIMES, I have modelled three countries as three separate regions (India, Bangladesh and Nepal). Now in the current setting, Nepal and India regions are linked to each other through bi-lateral electricity trade process. Similarly, the India and Bangladesh regions are linked to each other through bi-lateral trade process.

Now, I have to link the Nepal and Bangladesh region to each other, so that they can undertake bi-lateral electricity trade. However, the electricity has to pass through India region as both Nepal and Bangladesh does not have a common boundary.

Therefore, I am planning to model the trade between Nepal and Bangladesh passing through India in such a way that India gains revenue from the electricity traded such as USD X per Unit of electricity traded between Bangladesh and Nepal.

For trade Between Bangladesh and Nepal, I have created a Bi-Lateral Trade process between the two regions. Now my query is how to model the wheeling charge gained by India through trade of electricity between Bangladesh and Nepal?

Warm Regards

Vinay Saini

[Antti-L]

From Wikipdedia, the free encyclopedia: A wheeling charge is a currency per megawatt-hour amount that a transmission owner receives for the use of its system to export energy.

In multi-regional models, one usually doesn't explicitly model any wheeling charges. Insofar as all the costs are already accounted in the model (investment costs, O & M costs, taxes, subsidies), there is no need to add any wheeling charges into the model, because it would mean double-counting the costs.  If Nepal imports, the Nepalese importers pay for the full price at the India/Nepal border, as determined by the model, and the Bangladeshian exporters only get the export price at the India/Bangladesh border, and vice versa. Thus, the wheeling charges are endogenously determined by the model.

I guess you could define such charges exogenously in some game theoretic, or agent-based models, but not so in TIMES.

[EDIT:| Of course, in some cases wheeling charges may not be imposed just for recovering the costs of transmission facilities, but for making extra profits. If that is the case, you could just add the charge as an extra cost/tax onto the transmission line between Bangladesh and Nepal. You can then separate out the extra cost/tax as an additional revenue in the results.

[vsaini]

Dear Dr Antti,

Thank you for the prompt reply and the Edit. I was looking for the edit answer as I am making this as a special case.

Thanks and Regards
Vinay Saini

[vsaini]

Dear Dr. Antti,

I need some further clarification on the application side of the technique you suggested.
The GAMS manual provides two options for putting tax i.e. either on commodity or on the process.
- Tax on Commodity- COM_TAXPRD (Tax on the production of a commodity within a region for a particular timeslice)
- Tax on Process- FLO_TAX (Tax on a process flow).
However, in my case the Bi-trade process has two regions Bangladesh and Nepal and the tax parameter will only be applicable to one of these two regions therefore increasing the cost of import. But, I need to model this tax in such a way that the revenue earned from the tax is added to India region objective function, so as to reduce the cost of Indian power system. Please suggest how to do this?

(the GAMS manual says Taxes and subsidies on investments are treated exactly as investment costs in the objective function)

[Antti-L]

I don't think your question is a technical problem related to TIMES, but a general modelling question, that would apply to any multi-region partial equilibrium energy system models.

From my personal point of view, if I would have a similar modelling need, I think I would just add a segment for the transmission line into India, put a tax there and handle those Indian tax proceeds with post-processing. In the results you have all costs and taxes separately both for the objective function components and for the annualized costs/taxes by process and commodity. Taxes and subsidies are not real costs, and so you can just treat the taxes collected by the transmission line operator as extra revenues for the Indian operator, whether government-owned or private.