HVDC Line Placement for Maximizing Social Welfare — An Analytical Approach

This paper derives a method for HVDC line placement in order to maximize social welfare. Assuming linear generator costs, it shows that for N congestions, there exist exactly N + 1 marginal generators. It then demonstrates that HVDC lines connecting a high-cost with a low-cost marginal generator lead to the maximization of social welfare. The method poses an upper bound on the line installation costs, which could also be used to increase the efficiency of optimization algorithms. At the same time, it shows that an optimal HVDC placement is not necessarily along the overloaded lines. Furthermore, an algorithm for HVDC placement is developed taking into account the line capacity and the generator constraints to estimate expected generation cost savings. The validity of the approach is demonstrated on two case studies: a 10-bus network, and a simplified European network.