Economics of planning electricity transmission considering environmental and health externalities.

ABSTRACT

Long-distance electricity transmission can achieve environmental benefits through the transfer of air pollutants. However, current electricity transmission investment decisions do not take enough environmental factors into account. This study combines Greenhouse Gas-Air Pollution Interactions and Synergies model with power system planning to reveal how regional differences in environmental and health losses affect the allocation of electricity at the spatial level. Based on the analysis of inter-provincial electricity interconnection in China, we find that the regional differences in environmental and health external costs of power generation are significant. Considering external costs in investment decisions will largely improve the economy of long-distance inter-regional electricity transfer dominated by ultra-high voltage lines, thus replacing a portion of intra-regional electricity transfer dominated by high voltage lines. Meanwhile, the increases in local health losses in major electricity exporting provinces are not significant, which can alleviate the regional equity issues caused by pollutant transfer.