Optimal pricing of transmission services: application to large power systems

Abstract

The paper describes the application of a previously reported optimal transmission pricing method to a large power system. The transmission prices are determined by a global benefit optimisation algorithm that allocates both capacity and operational costs on a time-of-use basis. It is shown that optimal prices may be derived using a conventional mathematical programming algorithm and results are presented in relation to the IEEE 24 bus test network. A particular feature of the present method is the inclusion of both power system security and energy transportation costs. This is achieved by a specialised technique for iterating between benefit maximisation and a system security assessment. Results presented illustrate time-of-use transmission tariffs, together with the variation of capacity costs with system security standards.