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Power Grid Operation in a Market Environment: Economic Efficiency and Risk Mitigation

Hong Chen (Editor)
ISBN: 978-1-118-98454-3
288 pages
November 2016, Wiley-IEEE Press
Power Grid Operation in a Market Environment: Economic Efficiency and Risk Mitigation (1118984544) cover image

Description

Covers the latest practices, challenges and theoretical advancements in the domain of balancing economic efficiency and operation risk mitigation 

This book examines both system operation and market operation perspectives, focusing on the interaction between the two. It incorporates up-to-date field experiences, presents challenges, and summarizes the latest theoretic advancements to address those challenges. The book is divided into four parts. The first part deals with the fundamentals of integrated system and market operations, including market power mitigation, market efficiency evaluation, and the implications of operation practices in energy markets. The second part discusses developing technologies to strengthen the use of the grid in energy markets. System volatility and economic impact introduced by the intermittency of wind and solar generation are also addressed. The third part focuses on stochastic applications, exploring new approaches of handling uncertainty in Security Constrained Unit Commitment (SCUC) as well as the reserves needed for power system operation. The fourth part provides ongoing efforts of utilizing transmission facilities to improve market efficiency, via transmission topology control, transmission switching, transmission outage scheduling, and advanced transmission technologies. Besides the state-of-the-art review and discussion on the domain of balancing economic efficiency and operation risk mitigation, this book:

  • Describes a new approach for mass market demand response management, and introduces new criteria to improve system performance with large scale variable generation additions
  • Reviews mathematic models and solution methods of SCUC to help address challenges posed by increased operational uncertainties with high-penetration of renewable resources
  • Presents a planning framework to account for the value of operational flexibility in transmission planning and to provide market mechanism for risk sharing

Power Grid Operations in a Market Environment: Economic Efficiency and Risk Mitigation is a timely reference for power engineers and researchers, electricity market traders and analysts, and market designers.

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Table of Contents

FOREWORD ix

PREFACE xi

ACKNOWLEDGMENT xiii

CONTRIBUTORS xv

PART I INTEGRATED SYSTEM AND MARKET OPERATION

CHAPTER 1 BALANCE ECONOMIC EFFICIENCY AND OPERATION RISK MITIGATION 3
Hong Chen and Jianwei Liu

1.1 Power System Operation Risk Mitigation: The Physics 4

1.2 Integrated System and Market Operation: The Basics 11

1.3 Economic Efficiency Evaluation and Improvement: The Economics 20

1.4 Final Remarks 35

Appendix 1.A Nomenclature 36

Appendix 1.B Electricity Market Model 37

References 39

Disclaimer 41

CHAPTER 2 MITIGATE MARKET POWER TO IMPROVE MARKET EFFICIENCY 4
Ross Baldick

2.1 Introduction 43

2.2 Price Formation in Electricity Markets 50

2.3 Price and Offer Caps 52

2.4 Ability and Incentive to Exercise Market Power 53

2.5 Market Power Mitigation Approaches 57

2.6 Conclusion 65

Acknowledgments 65

References 65

PART II UNDER SMART GRID ERA

CHAPTER 3 MASS MARKET DEMAND RESPONSE MANAGEMENT FOR THE SMART GRID 69
Alex D. Papalexopoulos

3.1 Overview 69

3.2 Introduction 72

3.3 Distributed Computing-Based Demand Response Management Approach 74

3.4 The ColorPower Architecture and Control Algorithms 75

3.5 Integration with the Wholesale Energy Market 80

3.6 Equalizing Market Power Between Supply and Demand 83

3.7 Generalization Beyond Demand Response 84

3.8 A Numerical Example 87

3.9 Concluding Remarks 88

Appendix 3.A Nomenclature 89

References 89

CHAPTER 4 IMPROVE SYSTEM PERFORMANCE WITH LARGE-SCALE VARIABLE GENERATION ADDITION 91
Yuri V. Makarov, Pavel V. Etingov, and Pengwei Du

4.1 Review of Regulation and Ancillary Services 92

4.2 Day-Ahead Regulation Forecast at CAISO 93

4.3 Ramping and Uncertainties Evaluation at CAISO 99

4.4 Quantifying the Regulation Service Requirements at ERCOT 103

4.5 Conclusions 111

Appendix 4.A Nomenclature 112

References 113

PART III STOCHASTIC APPLICATIONS

CHAPTER 5 SECURITY-CONSTRAINED UNIT COMMITMENT WITH UNCERTAINTIES 117
Lei Wu and Mohammad Shahidehpour

5.1 Introduction 118

5.2 SCUC 119

5.3 Uncertainties in Emerging Power Systems 125

5.4 Managing the Resource Uncertainty in SCUC 134

5.5 Illustrative Results 155

5.6 Conclusions 163

Appendix 5.A Nomenclature 164

Acknowledgments 166

References 166

CHAPTER 6 DAY-AHEAD SCHEDULING: RESERVE DETERMINATION AND VALUATION 16
Ruiwei Jiang, Antonio J. Conejo, and Jianhui Wang

6.1 The Need of Reserves for Power System Operation 169

6.2 Reserve Determination via Stochastic Programming 170

6.3 Reserve Determination via Adaptive Robust Optimization 179

6.4 Stochastic Programming vs. Adaptive Robust Optimization 182

6.5 Reserve Valuation 185

6.6 Summary, Concluding Remarks, and Research Needs 191

Appendix 6.A Nomenclature 192

References 193

PART IV HARNESS TRANSMISSION FLEXIBILITY

CHAPTER 7 IMPROVED MARKET EFFICIENCY VIA TRANSMISSION SWITCHING AND OUTAGE EVALUATION IN SYSTEM OPERATIONS 197
Kwok W. Cheung and Jun Wu

7.1 Background 197

7.2 Basic Dispatch Model for Market Clearing 198

7.3 Economic Evaluation of Transmission Outage 201

7.4 Optimal Transmission Switching 203

7.5 Selection of Candidate Transmission Lines for Switching and Implementation of OTS 206

7.6 Test Cases 210

7.7 Final Remarks 216

Appendix 7.A Nomenclature 216

References 217

CHAPTER 8 TOWARD VALUING FLEXIBILITY IN TRANSMISSION PLANNING 219
Chin Yen Tee and Marija D. Ilíc

8.1 Introduction 219

8.2 Scale Economies of Transmission Technologies 221

8.3 Disconnect of Current Power System Operational, Planning, and Market Mechanisms 225

8.4 Impact of Operational and Market Practices on Investment Planning 225

8.5 Information and Risk Sharing in the Face of Uncertainties 230

8.6 Challenges in Designing Financial Rights for Flexibility 234

8.7 Conclusions 235

Appendix 8.A Nomenclature 236

Appendix 8.B Mathematical Models Used for Case Studies 238

Appendix 8.C Investment Cost 247

References 248

INDEX 251

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Author Information

Hong Chen, PhD, is a Senior Consultant at PJM Interconnection in Pennsylvania, USA, and was a Principal Analyst in electricity market design and development at ISO New England, USA. Dr. Chen received her PhD in electrical and computer engineering, ME in power systems, and BE in power systems.  She has more than 20 years of experience within the power industry and has been active author, editor and committee leader in IEEE activities. Dr. Chen is the current chair of Power System Operation, Planning and Economics committee in the Power and Energy Society of IEEE.

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