Transmission expansion planning under uncertainty - The role of FACTS in providing strategic flexibility

Efficient and well-timed investments in electric transmission networks - that suitably cope with the large power market uncertainties- is currently an open issue of considerable research interest. Strategic flexibility for seizing opportunities and cutting losses contingent upon the market evolution is of enormous value when assessing investments under uncertainties. In this sense, FACTS devices appear as an effective means of adding strategic flexibility to the transmission expansion planning. This article proposes an expansion planning approach which assesses the option value of deferring expansion investments in transmission lines while gaining flexibility by investing in FACTS devices. In a numerical example, a conventional expansion alternative (only transmission lines) is compared to a flexible investment alternative (transmission lines & FACTS) in order to shed light on the investment signals that each approach provides. The article shows that a suitable combination between lines and FACTS could generate flexible investments in smaller stages, instead of infrequent investments in large transmission expansion projects, which facilitates the progressive adaptation of the electric network to the changing scenarios.