Fig. 8: Two illustrations of the methodology employed to account for saturation effects.

Left and center panels: Each black point is an hourly observation from the half-month period that starts on the listed date. The red curve is the supply curve fitted to these points, and the blue curve is the red curve shifted to pass through the hour currently being analyzed. Right panel: The blue curves in the left and center panels combine to the transmission demand curve shown here. The area under the curve is the transmission value for the specified hour. In the upper example, transmission value declines slowly and the value is close to the marginal value. In the bottom example, transmission value declines quickly and prices converge before 1 GW of capacity is fully utilized. Supplementary Fig. 9 offers three more detailed illustrations of the same methodology.