Power Grid Operation in a Market Environment

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