Analysis of profit models for cross-border power interconnection projects

Volume 2 Number 5 October 2019 (457-464) DOI: 10.1016/j.gloei.2019.11.021

Global Energy Interconnection Contents lists available at ScienceDirect https://www.sciencedirect.com/journal/global-energy-interconnection Full-length article

Analysis of profit models for cross-border power interconnection projects Jing Li1, Guowei Gao1, Li Ma1, Tian Zhao1, Haoyuan Qu1, Fu Chen2 1. State Grid Energy Research Institute Co., Ltd, Beijing 102209, P.R. China 2. Global Energy Interconnection Development and Cooperation Organization, Xicheng District, Beijing 100031, P.R. China

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Abstract: With the increasing demand worldwide for power grid interconnection, a growing number of related projects are under planning or construction. Despite the rapid growth of cross-border interconnection projects, the systematic research on profit models for these projects is insufficient. This paper first analyzes the profit sources of interconnection projects. Based on the analysis results, profit models are considered under different regulatory systems for three types of crossborder interconnection projects: fully market-oriented, semi-marketization, and fully supervised. Finally, measures for increasing the profitability and sustainable development of power interconnection projects are proposed. Keywords: Profit model, Power interconnection, Regulatory system, Physical transmission rights, Financial transmission rights.

1 Introduction Cross-border power interconnection projects play an important role in optimizing energy resource allocation, promoting low-carbon development, and consolidating energy security worldwide. With the expansion of power interconnection around the world, the scale of cross-border power transactions is rapidly increasing. According to 2016

Received: 18 June 2019/ Accepted: 20 July 2019/ Published: 25 October 2019 Jing L i [email protected]

Tian Zhao [email protected]

Guowei Gao [email protected]

Haoyuan Qu [email protected]

Li Ma [email protected]

Fu Chen [email protected]

International Energy Agency (IEA) statistics, global crossborder power transactions totaled 726 billion kWh, which is an increase of 34% from 541.6 billion kWh in 2004, with an average annual growth rate of about 3%. This is higher than the 1.5% average annual growth rate of international oil trade at the same time [1]. Compared with domestic power transmission projects, power interconnection projects involve political, economic, legal, and regulatory coordination between two countries. Therefore, the profit model is more complicated. Despite the rapid growth of cross-border power transactions, their proportion of the total electricity consumption was still only 3% in 2016. Therefore, crossborder interconnection projects have attracted relatively little attention, and related academic research has mainly focused on the profile and trends of cross-border power interconnection [2-4], project operation [5], comprehensive socioeconomic benefits for interconnection projects [6-7], etc. Systematic research on project profit models is insufficient. With the gradual development of global energy

2096-5117/© 2019 Global Energy Interconnection Development and Cooperation Organization. Production and hosting by Elsevier B.V. on behalf of KeAi Communications Co., Ltd. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/ ).

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interconnection (GEI), the scale of power interconnection will increase in the future, and the number of related projects will also increase. This trend requires research on business models for power interconnection projects, and an innovative, diversified, and sustainable profit pattern needs to be designed based on current experience. This paper first summarizes the typical operation experiences for cross-border power interconnection projects in Europe and North America and then analyzes the compositions of revenue and cost for these projects. On this basis, fully market-oriented, semi-marketization, and fully supervised cross-border power interconnection projects are analyzed respectively, and their profit models are considered under different regulatory systems. Finally, a profit model is proposed for cross-border power interconnection projects in the context of GEI.

2 Revenue and cost of cross-border power interconnection projects 2.1 Revenue According to current operation experiences in Europe and the United States, the revenue for most cross-border power interconnection projects comes from auctions of physical transmission rights and financial transmission rights, fixed electricity tariffs, and others. 2.1.1 Revenue from physical transmission rights In some countries or regions, especially in Europe, cross-border power trading requires the purchase of physical transmission rights with the corresponding capacity. In the European electricity market, to ensure the implementation of electricity contracts, market members need to purchase cross-border physical transmission rights from multinational transmission system operators (TSOs) and then submit the transmission plans to the TSOs of the sending and receiving countries within a specified period of time. There are two major methods for auctioning physical transmission rights in Europe: explicit and implicit. (1) Explicit auction An explicit auction refers to the sale of all or part of the cross-border transmission capacity by multinational TSOs through annual and monthly public auctions. In general explicit auctions, auction participants submit the purchase intention and quotation of the transmission capacity on the transaction platform, and deals are made according to the order of quotation from high to low. An explicit auction is usually completed before a power spot market is opened. The European auction of cross-border physical transmission rights is organized by the Joint Allocation Office (JAO), which is an organization that serves 20 TSOs 458

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in 17 countries in Europe and is responsible for the capacity auction of 27 transnational transmission channels across the continent. Before the opening of the day-ahead electricity market, successful bidders need to submit a transmission plan for the next day to the corresponding TSO according to their obtained transmission capacity. The unused transmission capacity is recovered without compensation and then used in the implicit auction. The successful bidder can also transfer its holding capacity to other market entities in the secondary market. The fees obtained through the transfer are paid to the TSOs. (2) Implicit auction In an implicit auction, the transmission capacity is auctioned simultaneously with the energy market, and a separate auction for physical transmission rights is not performed. This auction is used in the day-ahead market. The cross-border transmission capacity is used as a constraint to optimize the clearing model so that the clearing results can meet the physical constraints of the networks. The process and principle of the implicit auction are as follows. First, the power dispatching institute issues the available transmission capacity (ATC) of the cross-border transmission channel to the power exchange institute. Market members submit electricity quotes according to their needs (these quotes do not include the price of the transmission rights). The market clearing model is used for joint optimization of multiple countries or price zones by taking the capacity of transnational transmission lines as a constraint. Thus, the transactions of market members are obtained in different countries or price ranges along with the transmission plans for each cross-border transmission line. When a cross-border transmission channel is not blocked, a market with lower prices will export to an adjacent market with higher prices, so the marginal clearing prices of both markets are equal, as illustrated in Fig. 1. In contrast, a price difference is generated between adjacent markets, which leads to a certain blocking income (i.e., congestion revenue), as illustrated in Fig. 2. This revenue is distributed to investors in cross-border interconnection projects. At present, the cross-border transmission capacity is distributed through both explicit and implicit auctions in Europe. Explicit auctions are mainly used for cross-border long-term power transactions, while implicit auctions are mainly used in the day-ahead joint market. In addition, for different cross-border transmission projects, the regulatory institute can also choose suitable capacity distribution methods. For example, the Spanish–Portuguese border project was approved to use long-term implicit auctions, and the Estonian–Latvian and Danish–German border projects adopted long-term explicit auctions. In recent years,

Jing Li et al. Analysis of profit models for cross-border power interconnection projects

P (€/MWh)

Purchase0

P (€/MWh)

Market A

Market B

Purchase

Purchase1

Import

PB Export PA* = PB*

PA* PA

Sale0

Sale QA

QA*

Sale1 QB

Q (MWh)

QB*

Q (MWh)

Fig. 1 Schematic diagram of market coupling without congestion P (€/MWh)

P (€/MWh)

Market A (Export = ATC)

Purchase0

Market B (Export = ATC) Purchase

Purchase1

ATC

PB PB* ATC

Price difference input determination congestion revenue

PA* PA

Sale0

Sale QA QA*

Sale1

Q (MWh)

QB

QB*

Q (MWh)

Fig. 2 Schematic diagram of market coupling with congestion

with the acceleration of the construction of a unified power market in Europe, the proportion of cross-border long-term power transactions has been declining. Thus, the proportion of explicit auctions for cross-border transmission rights has also decreased [8]. As an example, Table 1 lists the income components for the BritNed cross-border power interconnection project. BritNed connects the Isle of Grain in Kent, United Kingdom, with Maasvlakte in the Netherlands and has a total length of 260 km. It is the third cross-border transmission line in the United Kingdom and an important part of the European Super Grid Project. BritNed adopts a submarine high-voltage direct current (HVDC) transmission line with a voltage rating of 450 kV, and the maximum transmission capacity is 1 GW. This project was invested in by the National Grid of the United Kingdom and TenneT grid company of the Netherlands and began operation from April 1, 2011. In 2016, BritNed’s revenue was 208 million GBP of which the explicit auction revenue, implicit auction revenue, and other income made up 174 million GBP (83.7%), 20 million GBP (9.6%), and 14 million GBP (6.7%), respectively.

Table 1 Components of BritNed interconnection project’s income Year

2016

2015

Explicit auction revenue (million GBP)

174

159

Implicit auction revenue (million GBP)

20

18

Other Income (million GBP)

14

28

Total (million GBP)

208

205

2.1.2 Revenue from financial transmission rights Financial transmission rights are essentially a hedging financial instrument, and holders can obtain the right to share congestion revenue to hedge the congestion costs incurred in the electricity market. There are three ways to obtain financial transmission rights: annual centralized auctions, bilateral transactions in the secondary market, and monthly centralized trading for the remaining transmission rights. Similar to other financial futures products, the owner of financial transmission rights may earn or lose money. The basic principle is as follows: when the power flow congestion is in the same direction as the power 459

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transmission right, the holder of the financial transmission right profits. When the power transmission right is in the opposite direction of the power flow congestion, the holder incurs a loss. The financial transmission right also includes the option product, which is similar to the general commodity option. When the congestion is in the same direction as the transmission right, the option holder can exercise the right to cash the profit. However, when the direction is reversed, the execution requirement is not met. The option holder does not lose money and also does not profit. Financial transmission rights are common in the United States’ electricity market. In recent years, Europe has also begun to introduce long-term financial transmission rights auctions on some cross-border transmission lines. As demonstrated in Table 2, financial transmission rights auctions and implicit auctions have certain similarities as well as differences. They are similar because they both distribute the surplus capacity of the transmission line. The main difference between the two is that the financial transmission rights allocate the congestion revenue to the transmission rights holders, and the transmission line investors receive the auction income. Implicit auctions have no auction income because the market is not opened separately, and the congestion revenue is allocated to the transmission line investors.

project is jointly invested in by the national grid companies of one or both countries and is also part of the assets of the investor power grid companies. The fixed tariff is approved by the relevant government to cover the investment costs of project investors. 2.1.4 Other revenue In addition to generating revenue from electricity volume, cross-border power interconnection projects can also earn revenue by providing ancillary services to the system, such as frequency response, black start, and reactive power reserve. With the increased proportion of renewable energy integration, power systems face the challenge of fluctuations in renewable energy. Cross-border power interconnection projects can provide more flexibility and reliability for the power system to avoid the curtailment of renewable energy. Moreover, for countries already at market capacity, cross-border power interconnection projects can provide a power system with available capacity to earn revenue.

2.2 Costs

Financial Transmission Rights Auction

Implicit Auction

Transaction Mode

Bilateral transaction, centralized action, etc.

Carried out simultaneously with the energy market, no separate auctions

The cost of a cross-border power interconnection project is similar to that of a domestic project and includes depreciation as well as operating and maintenance costs. Depreciation cost refers to the cost of the original value and depreciation rate of the fixed assets of the transmission and distribution approved by the regulatory agency for the project. The operating and maintenance costs refer to the cost of maintaining the normal operation of the multinational power interconnection project and include material costs, repair costs, employee compensation, and other expenses. As indicated in Table 3, in the case of BritNed, the total cost in 2016 was 39.5 million GBP; depreciation accounted for the highest proportion at 37.7%.

Transaction Object

Income from congestion revenue

Usage of transmission capacity

Table 3 Costs of the BritNed interconnection project

Congestion Revenue Party

Holder of financial transmission rights

Transmission holders

Auction Revenue Party

Transmission holders

None

Table 2 Differences between a financial transmission rights auction and implicit auction

2.1.3 Revenue from fixed tariffs Instead of transmission rights auctions, the tariffs for some cross-border power interconnection projects are determined by fixed price agreements between two governments or grid companies, and the revenue of these projects is directly proportional to the volume of delivered electricity. The fixed tariff is usually applied to countries with an incomplete domestic electricity market or power regulatory system. The cross-border power interconnection 460

Year

2016

2015

Depreciation (million GBP)

14.9

14.9

Amortization (million GBP)

0.7

0.7

Labor cost (million GBP)

5.2

4.1

Operating rent expense (million GBP)

2.6

2.7

Foreign currency loss (+) or surplus (-) (million GBP)

3.8

-0.5

Insurance (million GBP)

4.2

3.9

Other cost (million GBP)

8.1

6.5

Total (million GBP)

39.5

32.3

Jing Li et al. Analysis of profit models for cross-border power interconnection projects

3 Profit model for cross-border power interconnection projects under different regulatory systems Practical experience has shown that, depending on the regulatory system, cross-border power interconnection projects can be divided into three categories: fully marketoriented, fully supervised, and semi-marketization. The profit of a fully market-oriented project is equal to the income with the costs deducted. The profit of a fully supervised project is determined by the regulatory institute and is usually relatively fixed. The profit of a semimarketization project floats within the limits prescribed by the regulatory institute. The projects in the United Kingdom are taken as an example below. There are currently 11 cross-border transmission lines in operation or under construction, which are summarized in Table 4. BritNed is a fully marketoriented project. IFA, Moyle, EWIC, and ElecLink are fully regulated projects. NEMO, NSN, FAB Link, IFA2, Viking, and Greenlink are semi-marketization projects. Table 4 UK interconnection projects in operation, being planned, or under construction Planned or Project Operating Type Time

Name

Investor

Link Country

Capacity

IFA

National Grid Interconnector Holdings (NGIH) and RTE

UK– France

2000 MW

Moyle

Mutual Energy

BritNed

NGIH and TenneT

EWIC

EirGrid

UK– Ireland UK– Holland UK– Ireland

Fully super. Fully 1000 MW market. Fully 500 MW super.

ElecLink

Star Capital Partners Limited and Groupe Eurotunnel

UK– France

1000 MW

NEMO NGIH and Elia NGIH and Statnett Transmission FAB Link Investment and RTE NSN

UK– Belgium UK – Norway

Fully super.

500 MW

Fully super.

Semimarket. Semi1400 MW market.

1000 MW

1986

2002 2011 2012

2019

2019 2020

UK– France

1400 MW

Semimarket.

2022

IFA2

NGIH and RTE

UK– France

1000 MW

Semimarket.

2020

Viking

NGIH and Energinet.dk

UK– Demark

1000 MW

Semimarket.

2022

UK– Ireland

500 MW

Semimarket.

2021

Greenlink Element Power

3.1 Profit model for fully market-oriented projects For a fully market-oriented project, investors evaluate and select a cross-border power interconnection project with potential profit to invest in and build. After the project is completed, they earn revenue through an auction of the transmission capacity or by providing other services. The investors are fully responsible for risks such as price fluctuations and market changes and do not enjoy government subsidies or transfer payments. In a fully market-oriented scenario, the profitability of a cross-border power interconnection project is equal to the income with the cost deducted, and it varies significantly depending on the market conditions. Based on a current operation experiences with crossborder power interconnection projects around the world, the fully market-oriented profit model is based on the following premise and background: (1) The relevant countries have insufficient regulation of grid transmission and distribution prices, so the cross-border power interconnection project is constructed and operated spontaneously according to market demand. In the context of the unsound regulatory system and the government’s inability to promote crossborder networking in many developing countries, investors in cross-border power interconnection projects spontaneously enter the field and achieve profitability based on the existence of electricity price gaps between two countries. (2) The relevant countries have established a relatively perfect system for cross-border power grid supervision and have already adopted incentive measures for these projects. However, for projects with good market prospects and sustainable development capabilities, investors are encouraged to choose a fully market-oriented model because it can reduce regulatory costs and leverages investor enthusiasm. For example, the Office of the Gas and Electricity Markets (OFGEM) in the United Kingdom allows investors to choose a fully market-based profit model and independently take risks, which exempts them from some strict regulatory measures for grid costs and benefits. The BritNed interconnection project between the United Kingdom and the Netherlands is based on a fully marketbased profit model. Since its inception in 2011, BritNed’s operating income has grown steadily with an average compound annual growth rate of 71.5%; this has mainly been due to the rapid increase in power trading between the United Kingdom and the Netherlands and the rising demand for cross-border transmission capacity. With the gradual increase in wind power generation in the Netherlands and the declining costs for wind energy, the domestic electricity price in the Netherlands has been declining. The difference 461

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between the electricity prices of the United Kingdom and the Netherlands gradually increased in 2012–2016, which was the primary driving factor for the expansion of power trade between the two countries. From BritNed’s return on assets, the overall profitability of the project is very strong, and the return on assets is 29.5%; this is far higher than the social average and the average level in the power industry. The key to ensuring the profitability of a fully marketoriented interconnection project is accurately forecasting the power supply and demand of the two countries. For a long time, the United Kingdom electricity price has been higher than the EU national average, especially compared to neighboring countries. BritNed investors judged that, under the pressure to protect the environment and reduce carbon emissions, a number of coal-fired and oil-fired generating units in the United Kingdom will be shut down, and clean energy power generation cannot fully meet domestic demand. In the future, British power will be in short supply. The situation of the United Kingdom having higher electricity prices than continental Europe will continue to exist. After BritNed was completed, the market trend was in line with this expectation, which ensured the investment income of the transmission line. The BritNed case shows that accurately predicting the power supply and demand in the fully market-oriented scenario is essential because the investors in cross-border power interconnection projects cannot enjoy government subsidies and transfer payments and need to fully assume the investment risks.

3.2 Profit model for fully supervised projects In a fully supervised project, the income of the crossborder power interconnection project is completely determined by the government according to the allowable investment return and permitted cost. The profit level and investment return rate are relatively fixed, and there is no direct relationship with the transmission volume and tariffs. The revenue for a project can be described as follows: (1) R = (RB × RoR) + D + O&M + T where R is the revenue for the interconnection project, RB is the annual investment or rate base, RoR is the allowable rate of return, D is the annual depreciation, O&M is the annual operating and maintenance cost, and T is the annual tax amount. Fully supervised projects are usually applicable in the following scenarios: (1) The supervision systems of the two countries are quite different, and supervision is difficult. The cross-border power grid investment and construction takes the national border as the boundary, and each country is responsible for the domestic routes. Each country also regulates the interconnected power grid according to their 462

own regulatory system. (2) The economic benefit of the cross-border power interconnection project is generally of strategic importance. To ensure long-term sustainable operation, a country treats it as a domestic power grid and adopts supervision with a licensed cost and reasonable income. The cross-border power interconnection projects of the Manitoba Hydro Electric Board (MHEB) in Canada are typical of fully supervised projects. MHEB has invested in a number of transnational transmission lines between the United States and Canada, and these projects are strictly supervised by Canadian regulators. MHEB determines the rates of different transmission services and customers based on the approved total revenue and makes regular adjustments as approved by the regulatory body. During each regulatory cycle, MHEB submits total revenue requirements to Canadian regulators. As an example, Table 5 presents the 2014 data for MHEB. The total annual revenue included operating costs, depreciation, taxes, and return on investment. The return on investment consists of the interest expense and equity income. Interest is calculated based on the Royal Bank of Canada’s long-term loan interest, and equity returns are calculated based on the return on equity allowed by the regulator, which is between 8% and 9.5%. Table 5 Allowable income and components of MHEB in 2014 Project

Amount

Operating cost (million CAD)

65.06

Depreciation (million CAD)

53.33

Taxes (million CAD)

6.14

Allowable earnings (including interest and return on equity) (million CAD)

47.15

Allowable total income (million CAD)

171.68

When the operating environment changes, MHEB can submit an application to the regulatory agency to adjust the total allowable income and provide sufficient supporting materials, such as new construction and renovation of grid facilities or cost changes. After several rounds of arguments, the regulatory agency fully considers the opinions of stakeholders and decides whether to agree to the adjustment and the scope of adjustment. The most recent rate adjustment request was made in early 2015. The MHEB application adjusted the total allowable income for 2015–2016 and 2016–2017, and the final review passed an adjustment of 3.95%.

Jing Li et al. Analysis of profit models for cross-border power interconnection projects

3.3 Profit model for semi-marketization projects For a semi-marketization project, the regulators approve the minimum revenue according to the cost and allowable investment return of the project as well as determine the revenue ceiling according to the market conditions and overall return level of the industry. In this way, the income level of the project operator is between the upper and lower limits. This not only guarantees income but also avoids excess profits. The minimum revenue is described by equation (1). The maximum allowable revenue is given by MARt = MARt-1 × (1 + PIt − X) (2) where MAR is the maximum allowable income, PI is the retail or consumer price index, X is the efficiency factor, and t is the regulation year. A typical semi-marketization mechanism is the cap and floor regime adopted by OFGEM for some cross-border power interconnection projects being planned and built in the United Kingdom. The mechanism stipulates the upper and lower limits of the income that can be obtained by the interconnection project. Revenue above the upper limit is returned to the user. Revenue below the lower limit is supplemented by the National Grid Electricity Transmission Company (NGET), and this part of the cost is then passed on through the Transmission Network Use of System Charges (TNUoS) to all users. OFGEM sets different upper and lower limits depending on the project. The lower limit covers at least the operating and debt costs of the line owner to reduce the investment risk. The proceeds are approved once a year, and the excess and deficit from the previous year are used to adjust the upper and lower limits for the next year. Of course, the owners of the cross-border power interconnection projects can also choose not to adopt the upper and lower limits and instead operate in a fully marketoriented environment like the BritNed project.

4 Development proposals for cross-border interconnection projects in the context of Global Energy Interconnection With the increase in GEI, the scale and voltage level of interconnected power grids will be further enhanced in the future. Meanwhile, more developing countries with lower price tolerance, insufficient power market, and power supervision systems will expand the scale of grid interconnection. Thus, expanding the profit model for cross-border power interconnection projects is of great significance. (1) Give full play to the comprehensive benefits of upstream and downstream integration. The single cross-

border transmission business has a relatively simple profit model. A fully market-based project has high income uncertainty. The revenue growth of a fully supervised project is constrained by the regulatory system. The income growth of a semi-marketization project is also capped. If a company is involved in more links in the power industrial chain (i.e., power generation, transmission, distribution, and electricity sales), more comprehensive advantages can be realized. Synergy and complementarity between upstream and downstream businesses can be achieved, and the diversity of profit models can be increased. Therefore, under the premise of legal and regulatory systems, multinational power interconnection projects (especially large-scale and long-distance ones) can adopt a model that integrates transmission and distribution or transmission and retail to enhance the ability of the project to withstand risk and increase profitability. (2) Explore innovative businesses. After a cross-border power interconnection project is completed, it can serve as a platform for regional energy resource allocation, power trading, and comprehensive services. It can be used to aggregate diversified services such as information from both supply and demand and to provide value-added services. The main market players can carry out a variety of innovative transactions, investment and financing, and consulting services. Through the analysis, calculation, and application of big data, deep data mining can be realized, and more accurate, innovative, and diversified services can be provided to various market entities to expand the profitability of cross-border power interconnection projects. (3) Obtain more government support for cross-border power interconnection projects. Similar to other important infrastructure, power interconnection projects have a large investment scale, long payback period, and high uncertainty. Although the comprehensive benefits are significant, it is difficult to attract sufficient investment solely by market power. These projects need more government support. When designing the regulatory system, governments can increase incentives for investors to participate by increasing the permitted rate of return or adopting incentive mechanisms, encourage project investment operators to explore innovative profit models, and enhance sustainable development for the cross-border power interconnection projects.

5 Conclusion As an industry that tends to natural monopolies, the power grid is usually strictly regulated by governments. For cross-border power interconnection projects, the 463

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regulatory systems of relevant countries have an important impact on the profit model. In recent years, countries have continuously improved the regulatory systems for cross-border power grids and explored regulatory models that can both stimulate investor enthusiasm and limit the monopoly effect. In the context of GEI, large-scale crossborder grid interconnection is highly desired, so these kind of projects need to explore innovative business models based on existing regulatory frameworks. These business models can exert a complementary influence on upstream and downstream industry chains to provide users with more comprehensive and accurate services and thus, further increase the profitability.

Acknowledgements This research was supported by the State Grid Corporation of China’s Science & Technology Project “Risk Identification and Countermeasures of SGCC in the Transition Period of Power Sector Reform.”

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Biographies Jing Li received his Ph.D. in Electrical Engineering from the University of Birmingham, Birmingham, UK, in 2016. He received his MEng from the University of Science and Technology of China, Hefei, China, and BEng from Chongqing University, Chongqing, China, in 2012 and 2009, 464

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respectively. He is now with the Department of Corporate Strategy, State Grid Energy Research Institute. His research interests include electricity market and trading as well as electricity reform and international development. Guowei Gao received a Ph.D. from Peking University, Beijing, in 2011. He is currently working at the State Grid Energy Research Institute. His research interests include energy economics and globalization.

Li Ma received her Ph.D. from Zhejiang University in 2003. She is currently the vicechief engineer of the State Grid Energy Research Institute. Her research interests include power sector reform, corporate strategy, and international development.

Tian Zhao received her Ph.D. from Peking University, Beijing, in 2014 and Bachelor’s degree from North China Electric Power University in 2009. She is currently working for the State Grid Energy Research Institute, and her research interests include internationalization strategy and climate change. Haoyuan Qu received her master degree from the Swiss Federal Institute of Technology, Switzerland, in 2016 and her bachelor degree from Tsinghua University, China, in 2013. She is currently working for the State Grid Energy Research Institute, and her research interests include power market and power sector reform. Fu Chen received his bachelor degree and PhD from Dalian University of Technology, Dalian, China, in 2012 and 2018, respectively. He is currently working for the Global Energy Interconnection Development and Cooperation Organization. His research interests include electricity market and trading, energy transition and policies, cross-border electricity trading, and water resources planning and management. (Editor

Dawei Wang)