C.W. Yu

Pricing transmission services in the context of industry deregulation

The changing structure of the electricity supply industry and the emergence of independent power producers and independent customers is bringing transmission pricing into a new focus. The costs of operating, maintaining and expanding the transmission system, that is pricing transmission services, needs to be addressed. This has to be done on an economically rational and technically meaningful basis and this paper suggests an approach which distinguishes between operating and embedded costs and develops separate methods in respect of each of these components. Capacity use as well as reliability benefits derived by different users are taken into account in the disbursement of charges for investment recovery. New insights into the marginal pricing approach to the recovery of operating costs are also briefly mentioned.

A Multimarket Decision-Making Framework for GENCO Considering Emission Trading Scheme

In a multimarket environment, a GENCO produces electricity subject to a number of factors, including physical and environmental constraints, together with trading strategies in the electricity market (EM), fuel market (FM) and carbon market (CM). To assist a GENCO to maximize its profits from EM, FM and CM, this paper proposes a dynamic decision making model with two consecutive stages. Fuzzy differential evolution algorithm is used to solve this decision-making problem. Taking transactions in the three interactive markets into account, the proposed model has been tested for a GENCO consisting of seven thermal units and a wind farm. A rational tradeoff between the profit-making and emission reduction has been demonstrated by the GENCO using the proposed model, indicating a well alignment with the intended goal of the introducing emission trading scheme (ETS).

Capacity-use and reliability based transmission embedded cost allocation with temporal considerations

Abstract Transmission services have to be provided as a separate item in a de-regulated or vertically restructured electricity supply industry. Though the primary function of a transmission line is to transmit power from source point(s) to loading point(s), major lines also play an important role in security. Sometimes a particular transaction cannot take place if a particular line is unavailable and, moreover, a specific line may be more important for the security of a particular transaction than it is for others. Clearly reliability is a relevant consideration in equitable cost allocation. A method for transmission line embedded cost allocation among transmission transactions accounting for both line capacity-use and reliability benefit is presented. Line capacity-use is determined by the amount of power transmitted, while the reliability benefit is calculated as the increment of the total probability of system failure, with the line out of service, compared to when the line is in service. Capacity-use is determined using a full AC power flow and hence the effects of reactive power can also be investigated. The cost allocation to each transaction according to the capacity-use and reliability benefit patterns throughout an accounting period during which system loading and line failure probability are varying are studied.

Long-run marginal cost based pricing of interconnected system wheeling

Abstract Each utility in an interconnected system has an obligation to guarantee sufficient transmission capability to maintain an efficient, economical, reliable and secure system during peak scenarios. Security is an important consideration underlying network investment. The standards of service have a direct impact on investment burdens and therefore definition and consensus among participants in respect of security standards are necessary. Charging for transmission services, ensuring the investment levels and recovery of sunk capital are new problems now receiving attention in the context of electricity supply industry unbundling. In this paper a method for long run marginal cost (LRMC) based pricing in multi-area interconnected system, based on the incremental use of each areas transmission network at times of peak flow, is proposed. The LRMC of transmission capacity is based on long term costs of transmission investment requirements. The marginal wheeling costs, with security taking into account, are computed using the sensitivities of the MW-mile of each area with respect to the bus power demand. These sensitivities are calculated using a linear expansion of the Kuhn–Tucker conditions of the investment cost optimization problem. Contingency ranking method is used to speed up the computation.

Optimal Spinning Reserve Capacity Determination Using a Chance-constrained Programming Approach

Abstract It is crucial to procure adequate amount of spinning reserve capacity for maintaining secure and stable operation of a power system. In the competitive power market environment, under the premise of well balancing the system reliability requirement and spinning reserve procuring cost, the determinination of the optimal spinning reserve capacity to account for the uncertainties of forced outage of generators as well as load forecasting errors is an important issue to be dealt with. In a chance-constrained programming framework, a mathematical model with the minimization of spinning reserve procurement cost as the objective and the system security requirement as a chance constraint is formulated. The problem is solved by a Monte-Carlo simulation-based genetic algorithm (GA). A test system with 18 generating units is employed to demonstrate the validity of the proposed model and the solution methodology.

Analysis of reactive power support of generators using power flow tracing methods

Abstract With the emergence of competitive electricity power markets, reactive power ancillary services and reactive power markets have attracted attention from researchers and system operators all over the world. Reactive power is an important system support service for secure and reliable operation of power systems. Improper management of reactive power can also hinder the operational efficiency of other power markets. It has been recognized that the reactive power of a generator has several roles, namely, supplying reactive demand, maintaining system security and supporting its real power transmission. It is rational that the minimal reactive power used to support its real power transmission should not receive financial compensation in power markets. Hence, this component of reactive power can be regarded as the minimal reactive power support of a generator. A reactive power optimization model along with a power flow tracing based method is proposed in this article to tackle this problem. The validity and rationality of the approach are verified using a simple meshed 5-bus system.

Sensitivity analysis of multi-area optimum power flow solutions

Abstract The objective of this paper is to formulate a multi-area full AC interconnected power system optimal power flow (OPF) model and develop a methodology for sensitivity analysis of the OPF solution, which can give information of how operation changes as a parameter in the power pool changes, given that optimality is maintained as the parameter varies. Information of these sensitivities is valuable for numerous practical reasons relating to system planning and tariffication.

Developing a Computer-Based Transmission-Pricing Model for Power Market Operation Teaching

Given the worldwide concerns of deregulation in the electricity supply industry the introduction of an undergraduate/postgraduate course on electricity market operation is both timely and important, and new teaching materials must be designed. One key issue underlying power market operation is the determination of wheeling rates. An appropriate approach to setting wheeling rates is probably the most important vehicle for encouraging both optimal use of the existing transmission capacity and investment in future expansion of transmission facilities. This paper presents the development of a computer-based model that helps students appreciate the concepts of marginal wheeling costs evaluation for different types of power transactions in a multi-area interconnected power system.

Energy transaction scheduling with interchange capability assessment under open transmission access

Abstract Power system operation with multiple energy transactions poses one of the challenges to the new competitive open-access power market environment. In this paper both individual and group transactions are assumed to exist in a power market. Transmission dispatch methodology for transaction requests to ensure feasibility and assessment of transfer capability of the transmission network to accommodate additional power transfers for selected transactions are developed. A transmission dispatch methodology is proposed to curtail requested transactions to ensure that there is no operating constraint violation. The transfer capability problem is thus formulated as an optimum power flow (OPF) problem where the objective is to assess the transfer capability for a set of selected transactions. The methodology is applied to a sample power network to verify its validity.

Analysis of transmission-embedded cost allocation schemes in open electricity markets

Transmission services have to be provided as a separate item in a deregulated or vertically restructured electricity supply industry. Methods for transmission line fixed-cost allocation among the transmission transactions accounting for line capacity use are presented. Cost allocation to each transaction will be according presented. Cost allocation to each transaction will be according to the capacity use patterns throughout an accounting period in to the capacity use patterns throughout an accounting period in an equitable manner. The allocation problem is approached from the point of view of a cooperative game theory.