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So far, the Spanish electricity system is the only one in Europe to implement a security or reliability of supply mechanism from the outset. After 10 years of controversial operation, on the occasion of the regulatory harmonization required in the context of the Iberian electricity market, the Spanish regulator has finally decided to reform the system''s so-called “capacity guarantee mechanism.” [Copyright &y& Elsevier]

Developing a regional power system to achieve a high level of integration of national systems requires sufficient development of the regional transmission grid. This is possible only with appropriate schemes for the complete cost–benefit analyses, and cost allocation of these transmission investments, which plays a critical role in the selection of the most efficient network investment and the proper assignment of their cost to the national systems. Network reinforcements affect the operation of power systems and, therefore, the externalities of power generation. This paper examines the impacts of integrating local air pollution damage from power production within the benefit assessment and cost allocation of transmission investments. The paper describes the methodology followed and illustrates its application in a real-life case study where a simplified version of a European network is considered. Within this case study, we have assessed the impact of considering the reduction in air pollution damage achieved through a particular HVDC project between France and Spain on the benefits, and benefit-driven cost allocation, computed for this project. In this case study, local pollution related benefits are a relevant fraction of the overall benefits of the considered transmission project. However, considering the local air pollution benefits of the project does not affect the net positive benefits of each country significantly, resulting in a limited change in the cost allocation of the project. [ABSTRACT FROM AUTHOR]

• Formulates a model for market equilibrium among producers and prosumers. • Converted into an equivalent optimization model through its KKT conditions. • Analyzes a Spain-like case study for the period 2019–2037. • Results show possible prosumer response to tariff structure. • Having different objective functions shows an example of incentive misalignment. Power systems will face important structural changes in the near future due to the empowerment of consumers, who may resort on self-consumption, and reduce their purchases of electricity from the grid. The avoided costs of purchasing energy, as compared to the investment costs of installing their own self-generation capacity, could be one of the drivers of the consumers' decision making. The system expansion will therefore result from the interaction of the traditional market agents, maximizing their profits by investing in and operating centralized generation assets, and the new active consumers, minimizing their expenses while meeting their energy needs. This paper presents a Nash equilibrium model that considers centralized and behind-the-meter distributed generation expansion, by representing the operation and investments decisions of both types of agents with their own conceptually different strategies. To simplify the resolution, the equilibrium model is transformed into an equivalent minimization problem from its Karush-Kuhn-Tucker conditions. The model application to Spain-like system case example allows to assess the impact of the network access-tariff (whether being mainly volumetric-based or power-based) and the impact of the big industrial market power on the generation expansion, for the time horizon 2019-2037. [ABSTRACT FROM AUTHOR]