Economic benefit assessment has become an integral requirement of transmission system planning in the context of electricity market deregulation around the world. In a deregulated electricity market, not only does transmission planning have to address technical requirements but also has to consider commercial issues linked to an electricity market. One of the prime goals of transmission planning is to ensure a fair distribution of economic benefits among the market participants (all those who produce, transmit and consume). These economic benefits attributable to a transmission interconnection generally appear as benefits to an electricity market and are referred to as market benefits. Even from a regulatory perspective, assessment of market benefits of a transmission interconnection is an essential requirement to ascertain its economic value.

The market benefit assessment of a transmission interconnector presented in this thesis is specific to the Australian National Electricity Market (NEM) consistent with the regulatory framework in the NEM. This thesis develops a market benefit assessment framework in accordance with Regulatory Investment Test for Transmission (RIT-T) to assess the economic significance of Basslink, one of six inter-regional transmission interconnectors in the Australian NEM. A long-term market benefit modelling framework comprising least cost modelling (LCM) and time sequential modelling (TSM) is developed and applied to undertake modelling of long term market benefits. PLEXOS, a leading power market modelling software is used for this purpose.

Economic analysis concludes that the presence of Basslink is of significant economic value in terms of market benefits for the ranges of market development scenarios (MDS) studied.