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With maturing deregulated environment for electricity market, cost of transmission congestion becomes a major issue for power syste m operation. Uniform Marginal Price and Locational Marginal Price (LMP) are the two practical pricing schemes on energy pricing and congestion cost allocation, which are based on different mechanisms. In this paper, these two pricing schemes are introduced in detail respectively. Also, the modified IEEE-14-bus system is used as a test system to calculate the allocated congestion cost by using these two pricing schemes.

Since 1989, many countries followed the trend to unbundle their vertically integrated power utilities into several components in order to bring competition to the energy supply industry [

The old England & Wales Pool was one of the pioneers for electricity industry deregulation in the world [

Congestion management is implemented through power energy prices and transmission usage charges [

where:

PSP: Pool Selling Price, actual price charged for load

PPP: Pool Purchase Price, actual price paid to the generator

SMP: System Marginal Price

LOLP: Loss of Load Probability

VOLL: Estimated amount customers are willing to pay to avoid supply interruption

Uplift: The cost of power losses, ancillary service and congestion

LOLP is the probability that electricity power capacity is unable to support the actual demand [

Congestion cost will be assigned to all loads and congestion cost assigned to load i as follows [

Uniform marginal price is a good innovation scheme to manage congestion after industry deregulation. Electricity prices barely reflect the congestion cost since the ISO ignores loads’ locations and power flow contributions. Generators are not charged for congestion so that correct signals are unable to pass to new market participant and transmission investment [

Locational Marginal Price (LMP) is the primary pricing scheme in the US electricity markets for congestion cost allocation. The definition of the LMP is the minimum marginal cost of the next increment of 1 megawatt hour power at a specific bus [

It is known that the sum of all power injected into all nodes is equal to sum of all power withdrawn from all nodes plus transmission losses which can be written as [

where:

Based on the Equation (5), the the corresponding Lagrangian equation can be defined as follows [

where:

N: Total number of nodes

L: Total number of transmission lines

Based on the Equation (6), equation of LMP of node i can be obtained as follows [

where:

From Equation (7), the LMP of a node i can be divided into three components as follows [

where:

Combine Equation (7) and Equation (8), each component is shown as follows [

By utilizing LMP approach, economic signals are indicated and can be reflected to market participants. The influence of transmission congestion and losses will be reflected in the LMP variation of nodes so that electricity market is transparent. For longer-term view, LMP gives incentives for generation and transmission investments. Nevertheless, LMP cannot be regarded as a perfect approach. Because generation bids submitted to the SO is bid-based rather than cost-base, generator companies still have chance to act gaming behaviors [

A modified IEEE-14-bus system has been built by the software package Matpower as shown in

This model is used to calculate congestion cost allocation by Uniform Marginal Price and Locational Marginal Price. Before the test, some parameters should be set as follows in

From

Simulate Uniform Marginal Price method to calculate congestion cost allocation and the results are shown as follows in

Using Matpower, the locational marginal prices of each load in unconstrained dispatch and security-constrained dispatch are obtained respectively as follows in

Generator | Bid price (£/MWh) | Min(MW) | Max(MW) | Load(MW) |
---|---|---|---|---|

Gen1 | 20 | 0 | 100 | 0 |

Gen2 | 50 | 0 | 100 | 24 |

Gen3 | 45 | 0 | 100 | 25 |

- | - | - | - | 26 |

- | - | - | - | 25 |

Gen6 | 35 | 0 | 100 | 24 |

- | - | - | - | 0 |

Gen8 | 30 | 0 | 100 | 0 |

- | - | - | - | 26 |

- | - | - | - | 25 |

- | - | - | - | 26 |

- | - | - | - | 25 |

- | - | - | - | 24 |

- | - | - | - | 25 |

Generator | Bid price(£/MWh) | Unconstrained dispatch (MV) | Security-constrained dispatch(MW) |
---|---|---|---|

Gen1 | 20 | 100 | 83.5 |

Gen2 | 50 | 0 | 0 |

Gen3 | 45 | 0 | 0 |

Gen6 | 35 | 75 | 91.5 |

Gen8 | 30 | 100 | 100 |

Total (£/h) | 7625 | 7871.9 | |

Congestion cost (£/h) | 246.9 |

From bus | To bus | Unconstrained dispatch flows(MW) | Security-constrained dispatch flows (MW) | Limit(MW) |
---|---|---|---|---|

1 | 2 | 70.4 | 60 | 60 |

1 | 5 | 29.6 | 23.5 | 100 |

2 | 3 | 18.3 | 16.3 | 100 |

2 | 4 | 14.0 | 9.9 | 100 |

2 | 5 | 14.1 | 9.8 | 100 |

3 | 4 | −6.7 | −8.7 | 100 |

4 | 5 | −0.5 | −1.1 | 100 |

4 | 7 | −24.4 | −27.8 | 100 |

4 | 9 | 6.2 | 4.2 | 100 |

5 | 6 | 18.3 | 7.2 | 100 |

6 | 11 | 17.6 | 20.8 | 100 |

6 | 12 | 20.0 | 20.5 | 100 |

6 | 13 | 31.7 | 33.4 | 100 |

7 | 8 | −100 | −100 | 100 |

7 | 9 | 75.6 | 72.2 | 100 |

9 | 10 | 33.4 | 30.2 | 100 |

9 | 14 | 22.3 | 20.1 | 100 |

10 | 11 | 8.4 | 5.2 | 100 |

12 | 13 | −5.0 | −5.0 | 100 |

13 | 14 | 2.7 | 4.9 | 100 |

Load | Demand(MW) | Allocated congestion cost (£/MWh) | Allocated congestion cost (£/h) |
---|---|---|---|

L2 | 24 | 0.9 | 21.5 |

L3 | 25 | 0.9 | 22.4 |

L4 | 26 | 0.9 | 23.3 |

L5 | 25 | 0.9 | 22.4 |

L6 | 24 | 0.9 | 21.5 |

L9 | 26 | 0.9 | 23.3 |

L10 | 25 | 0.9 | 22.4 |

L11 | 26 | 0.9 | 23.3 |

L12 | 25 | 0.9 | 22.4 |

L13 | 24 | 0.9 | 21.5 |

L14 | 25 | 0.9 | 22.4 |

Total | 246.9 |

Simulate Locational Marginal Price method to calculate congestion cost allocation and the results are obtained as follows in

Pick up the fourth column of

LMPs unconstrained (£/MWh) | LMPs security constrained (£/MWh) |
---|---|

35.0 | 20.0 |

35.0 | 40.0 |

35.0 | 37.8 |

35.0 | 35.9 |

35.0 | 34.6 |

35.0 | 35.0 |

35.0 | 35.7 |

35.0 | 32.9 |

35.0 | 35.5 |

35.0 | 35.4 |

35.0 | 35.2 |

35.0 | 35.0 |

35.0 | 35.1 |

35.0 | 35.3 |

Load | Demand(MW) | Load charge unconstrained (£/h) | Load charge security constrained (£/h) | Allocated congestion cost (£/h) | Allocated congestion cost (£/MWh) |
---|---|---|---|---|---|

L2 | 24 | 840 | 959.5 | 119.5 | 5.0 |

L3 | 25 | 875 | 945.0 | 70.0 | 2.8 |

L4 | 26 | 910 | 933.8 | 23.8 | 0.9 |

L5 | 25 | 875 | 863.9 | −11.1 | −0.4 |

L6 | 24 | 840 | 840 | 0 | 0 |

L9 | 26 | 910 | 924.0 | 14.0 | 0.5 |

L10 | 25 | 875 | 886.1 | 11.1 | 0.4 |

L11 | 26 | 910 | 915.9 | 5.9 | 0.2 |

L12 | 25 | 875 | 876.1 | 1.1 | 0.04 |

L13 | 24 | 840 | 841.9 | 1.8 | 0.08 |

L14 | 25 | 875 | 883.4 | 8.4 | 0.34 |

Total | 246.9 |

From

Zhao, J.W., Lu, J.F. and Lo, K.L. (2016) Review of Methods to Calculate Congestion Cost Allocation in De- regulated Electricity Market. World Journal of Engineering and Technology, 4, 16-26. http://dx.doi.org/10.4236/wjet.2016.43D003