TRANSMISSION CONGESTION IMPACT ON ELECTRICITY MARKET

Abstract

Transmission congestion has become a critical problem for the electricity markets in the deregulated power industry. It has impact on the entire system as well as on the individual market players i.e. sellers and buyers. Due to congestion power from the lowest-priced generators may not be utilized to meet the demand therefore demand is met from alternative resources which creates market power, defined as the conditions where a market participant can profitably maintain prices above a competitive level for a significant period of time. Congestion results an increase in locational marginal prices and causes loss in market efficiency. Therefore, congestion management becomes necessary. One of the reasons of large price spikes is the absence of active demand-side participation. In this thesis report, two methods of DSP are developed to manage congestion. First is the demand side bidding, in which DistCo offers price taking, price responsive and price responsive demand shift bids. Under PRDS bid, the consumers who respond to the price signals can shift their demand from peak period to the off-peak period. To quantify the impact of DSP on electricity market load participation factor is taken into consideration and for PRDS consumer, performance of DSP is measured by calculating effective cost for IMWh consumption. In the pool-based day-ahead electricity market, the market dispatch problem is formulated with the objective function as social welfare maximization subject to operational and security constraints and an IEEE-30 bus system is used to demonstrate the application of the method. It has been shown that PRDS bid leads to reduction in congestion and locational marginal prices. Another method is developed to reduce prices in peak period by installing energy storage (ES) system on the demand-side. Four bidding strategies of LSE are considered to determine prices when the operation patterns of demand-side energy storage systems are controlled by LSEs with consideration of market price fluctuations. The proposed methodology is applied on IEEE 30-bus system to demonstrate the economic advantage of ES system installed on demand-side.