Interconnector participation in capacity mechanisms: A new de-rating approach

In countries with Capacity Mechanisms in place, where Explicit Interconnector Participation model is to be used, one of the key market design questions to be answered is how the amount of interconnector capacity that is allowed to participate in the auctions should be determined. This paper argues for an interconnector capacity de-rating approach. In order for the de-rating factor to be representative of stochasticity inherent in the system, the concept of Interconnector Effective Load Carrying Capability is postulated in this paper. A method with probabilistic basis that allows for converting the name-plate capacity of a transmission line connecting two areas into a de-rated capacity is proposed. The proposed probabilistic methodology takes into account the technical availability of the line and captures the impact of simultaneous or co-incident scarcity. A simple case-study is presented to exemplify the proposed principle and methodology.