A proposal for investment recovery of FACTS devices in deregulated electricity markets

Abstract

The paper presents a methodology to quantify the benefits, in terms of monetary values, of FACTS devices when used in deregulated electricity market for congestion management. The proposed methodology is used in the proposal for investment recovery of FACTS devices. Despite the long history of development and mature technology, the practical installations of FACTS devices are still limited. The main reasons for few installations are high investment cost and lack of viable measures to quantify the long list of benefits offered by FACTS device. In this respect, the methodology proposed in the paper provides a promising solution. The proposed methodology is based on establishing pricing schemes with and without FACTS devices using OPF formulation. The volume of market with FACTS devices and the increase in surplus due to them forms the basis of quantifying their benefits. The pricing scheme does not destroy the incentive effect in short run and also makes possible the provision of merchant FACTS. The proposed concept was tested and validated with TCSC in five-bus test system. Result shows that, when TCSC is used to relieve congestion in the system and the investment on TCSC can be recovered.