Allocation of transmission capacity in the Central America electricity market

The six countries of Central America are developing a regional electricity market where trading is already intensive but limited by transmission constrains. These countries are currently developing a new transmission system (SIEPAC project) that will increase substantially the cross border capacity. However, both in the current and future situation, it is necessary to optimally allocate the scarce interconnection capacity. This paper explains the existing methodology for simultaneous auctions of energy and transmission capacity, and the proposal under discussion of implementation for point-to-point firm and financial transmission rights.