February 6, 2011

The Economics of Transmission Constraints on Wind Farms: Some Evidence from South Australia

by Nicholas Boerema and Ian MacGill

- There are many potential wind farm sites across Australia with excellent wind regimes yet only limited transmission capacity. Current market rules do not guarantee dispatch to an existing wind farm as more wind generation connects to the same transmission. Given the expense of transmission network extension and augmentation, there are interesting questions of what economic impacts such constraints might have for wind farm operators. This paper examines this issue in the context of the South Australian region of the Australian National Electricity Market (NEM). The State currently hosts almost half of total Australian wind generation capacity and has significant transmission capacity limitations for further development.

Boerema, N. and I. MacGill (2010). >"The Economics of Transmission Constraints on Wind Farms: Some Evidence from South Australia." Environmental Economics Research Hub Research Report No. 89, Sept 2010.