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The implementation of a centralized transmission expansion plan is a complex task when several investors compete and bid to build a new transmission asset, as is the case now in Chile. The assessment of a transmission project depends on the number of competitors, where the project is subject to risks, such as delays, penalties, and cost overruns. The risk faced by an investor is measured using the Conditional Value at Risk (CVaR), which can be interpreted as the risk of not reaching an expected return on investment, depending on the tolerance to risk and the real income obtained with the investor's portfolio. This risk comes from the difference between the regulated income (investor's bid) and the real cost during the implementation and operation of the transmission project. The difference is the “surplus” profit that the investor obtains by participating in the tender, considering their risk tolerance. The goal is to determine the optimal value of a risky investor's portfolio made up of several transmission projects. The optimal portfolio may allow the central planner to improve the efficiency of the project allocation process. To test the methodology, two case studies are analyzed: the IEEE 24-bus Reliability Test System and a predefined expansion plan of Chile's Central Interconnected System (SIC). [ABSTRACT FROM PUBLISHER]

This paper is the second of a two-paper series and presents a model to assess and promote investment projects defined in a plan of expansion of the transmission. We propose a model that consists of three main elements: valuation of a project based on the design of a linear contract, a principal-agent model to assess the optimal effort of an agent, and the right-of-way negotiating cost. We also define a model to evaluate bids by the agents. The value of the project depends on the number of competitors, the incentives to invest, and the right-of-way costs. The right-of-way cost is approached from the perspective of a bilateral bargaining problem. [ABSTRACT FROM PUBLISHER]

Different regulatory frameworks have implemented competitive mechanisms to increase efficiency in transmission, a natural monopoly. Conflicts of interest and hidden costs make necessary to define methods to obtain an appropriate valuation of new transmission assets. [ABSTRACT FROM PUBLISHER]