*Appendix A.5. Cross-Border Transmission Cost*

The costs of cross-border transmission come in two forms—a tariff and transmission loss. The tariff is paid to recover the capital investment and operational cost of the grid line. The transmission loss could be significant if the distance of transmission is long and is explicitly considered in Equation (4). The tariff of transmission, tpi,j, is the unit MWh transmission cost of power output from country i to country j. The total cost of cross-border power transmission in year t, using tpi,j, is expressed as TC(t) = ∑<sup>I</sup> <sup>i</sup>=<sup>1</sup> <sup>∑</sup><sup>J</sup> <sup>j</sup>=<sup>1</sup> <sup>∑</sup><sup>T</sup> <sup>v</sup>=−<sup>V</sup> <sup>∑</sup><sup>P</sup> <sup>p</sup>=<sup>1</sup> umijtvp ∗ θjp ∗ tpi,j.
