Richard P. O'Neill

Reserve Requirements for Wind Power Integration: A Scenario-Based Stochastic Programming Framework

We present a two-stage stochastic programming model for committing reserves in systems with large amounts of wind power. We describe wind power generation in terms of a representative set of appropriately weighted scenarios, and we present a dual decomposition algorithm for solving the resulting stochastic program. We test our scenario generation methodology on a model of California consisting of 122 generators, and we show that the stochastic programming unit commitment policy outperforms common reserve rules.

Optimal Transmission Switching

In this paper, we formulate the problem of finding an optimal generation dispatch and transmission topology to meet a specific inflexible load as a mixed integer program. Our model is a mixed-integer linear program because it employs binary variables to represent the state of the equipment and linear relationships to describe the physical system. We find that on the standard 118-bus IEEE test case a savings of 25% in system dispatch cost can be achieved.

Co-Optimization of Generation Unit Commitment and Transmission Switching With N-1 Reliability

Currently, there is a national push for a smarter electric grid, one that is more controllable and flexible. The full control of transmission assets are not currently built into electric network optimization models. Optimal transmission switching is a straightforward way to leverage grid controllability: to make better use of the existing system and meet growing demand with existing infrastructure. Previous papers have shown that optimizing the network topology improves the dispatch of electrical networks. Such optimal topology dispatch can be categorized as a smart grid application where there is a co-optimization of both generators and transmission topology. In this paper we present a co-optimization formulation of the generation unit commitment and transmission switching problem while ensuring N-1 reliability. We show that the optimal topology of the network can vary from hour to hour. We also show that optimizing the topology can change the optimal unit commitment schedule. This problem is large and computationally complex even for medium sized systems. We present decomposition and computational approaches to solving this problem. Results are presented for the IEEE RTS 96 test case.

Optimal Transmission Switching With Contingency Analysis

In this paper, we analyze the N-1 reliable DC optimal dispatch with transmission switching. The model is a mixed integer program (MIP) with binary variables representing the state of the transmission element (line or transformer) and the model can be used for planning and/or operations. We then attempt to find solutions to this problem using the IEEE 118-bus and the RTS 96 system test cases. The IEEE 118-bus test case is analyzed at varying load levels. Using simple heuristics, we demonstrate that these networks can be operated to satisfy N-1 standards while cutting costs by incorporating transmission switching into the dispatch. In some cases, the percent savings from transmission switching was higher with an N-1 DCOPF formulation than with a DCOPF formulation.

Efficient market-clearing prices in markets with nonconvexities

This paper addresses the existence of market clearing prices and the economic interpretation of strong duality for integer programs in the economic analysis of markets with nonconvexities (indivisibilities). Electric power markets in which nonconvexities arise from the operating characteristics of generators motivate our analysis; however, the results presented here are general and can be applied to other markets in which nonconvexities are important. We show that the optimal solution to a linear program that solves the mixed integer program has dual variables that: (1) have the traditional economic interpretation as prices; (2) explicitly price integral activities; and (3) clear the market in the presence of nonconvexities. We then show how this methodology can be used to interpret the solutions to nonconvex problems such as the problem discussed by Scarf [Journal of Economic Perspectives 8(4) (1994) 111].

Understanding how market power can arise in network competition: a game theoretic approach

This paper considers competition in electric networks and how the network structure affects the competition. The approach is to examine non-cooperative behavior among producers and calculate a Nash equilibrium under different market specifications. Unlike most other treatments of this problem, which utilize either Cournot or Bertrand models of competition, the model used here examines supply function competition. Two and four node networks are considered. Several results that differ from traditional economic theory are found. In both a two-node and four-node market with imperfect competition among producers, transmission constraints increase their profits (compared to an unconstrained network)—but with little or no change in consumer prices or quantities produced. This is because generators profit primarily at the expense of the owner of transmission rights. The size of the increase in profits depends on the number of firms at each node and the size of the transmission constraint. In the four-node case, an example was found in which decreasing market concentration by breaking up suppliers worsens market efficiency, even if there are no cost diseconomies. In particular, increasing competition at one node increases the consumer price at a second node, and causes an overall decrease in consumer surplus. In general, the cases presented here show that strategic behavior on electric networks may produce results that differ from those predicted by traditional economic theory due to the network structure of the problem.

Optimal Transmission Switching—Sensitivity Analysis and Extensions

In this paper, we continue to analyze optimal dispatch of generation and transmission topology to meet load as a mixed integer program (MIP) with binary variables representing the state of the transmission element (line or transformer). Previous research showed a 25% savings by dispatching the IEEE 118-bus test case. This paper is an extension of that work. It presents how changing the topology affects nodal prices, load payment, generation revenues, cost, and rents, congestion rents, and flowgate prices. Results indicate that changing the topology to cut costs typically results in lower load payments and higher generation rents for this network. Computational issues are also discussed.

Dispatchable transmission in RTO markets

We consider transmission owners that bid capacity, under appropriate Regional Transmission Organization (RTO) market rules, at a positive price into forward and spot (dispatch) auctions to derive congestion revenues. This can encompass daily, monthly, or multimonthly auctions, allowing for commitment of transmission to reflect market needs in different time periods, e.g., seasons. We provide two and three node examples and a general formulation of the auction model.

Design of Efficient Generation Markets

The design of spot markets for generation services, such as energy, regulation,and operating reserves, and longer term markets for capacity, remain in evolution in many countries. Market design includes definition of the service, bid, or offer requirements, and rules for pricing and financial settlement. In the United States, most organized regional markets have converged on similar elements of spot market design. The design of capacity markets remains influx. Market power mitigation is currently a regulatory requirement in the United States, and experience with different methods shows that it must be carefully aligned with market design to ensure both efficient pricing and efficient investment. This paper surveys these topics and their relationships to each other and identifies researchable issues.

Evaluation of a Truthful Revelation Auction in the Context of Energy Markets with Nonconcave Benefits

We describe a Vickrey-Clarke-Groves auction for supply and demand bidding in the face of market power and nonconcave benefits in which bidders are motivated to bid truthfully, and evaluate its use for power and gas pipeline capacity auctions. The auction efficiently allocate resources if firms maximize profit. Simulations, including an application to the PJM power market, illustrate the procedure. However, the auction has several undesirable properties. It risks being revenue deficient, can be gamed by cooperating suppliers and consumers, and is subject to the information revelation and bid-taker cheating concerns that make single item Vickrey auctions rare.