June 29, 2005

In search of the invisible guard network; how to implement the public role in securing delivery without disrupting the market?

This study provides an economic assessment of several options to provide a guard network for electricity production. The guard network is aimed at preventing black-outs, without distorting the electricity market.

Our analysis suggests that only if the guard network is placed outside the regular market, delivery is secured sufficiently. In this case, the transmission system operator deploys the guard network only after all other options have been exhausted and the alternative measure is to disconnect groups of users. By taking the capacity out of the market, prices increase, inducing new investments. When implementing the guard network, one should take into account the trade-off between certainty for investors and the flexibility of the instrument.

This publication is in Dutch.


Mark Lijesen
Gijsbert Zwart