Power Procurement Research Articles

Reactive power procurement model in electricity markets based on normalized effective reactive power reserve

SUMMARY As one of the important security criteria, power system operators closely monitor reactive power reserve in voltage control areas (VCAs) of their system to ensure voltage security and to prevent voltage collapse. Therefore, from a system/market operator perspective, proper management of reactive power reserve must be considered in reactive power procurement stage. This paper proposes a long-term procurement model to meet reactive power reserve requirements in competitive electricity markets considering both economical and technical issues. The model would be of interest to system/market operators since it is based on a new indicator referred to as normalized effective reactive power reserve (NERPR) as a more meaningful signal compared to other physical/economical indicators. The proposed framework for reactive power procurement determines accepted bids by minimizing the associated procurement cost while maximizing NERPR in each VCA of the system. Physical constraints such as generator capability curves and voltage security are taken into account in the formulation. Also, a population-based algorithm is introduced here to solve the mixed integer non-linear programming (MINLP) problem resulted from the procurement model. An algorithm is proposed to change the MINLP problem to series of NLP sub-problems. The CIGRE 32-bus test system is used to test the feasibility of the proposed procurement model. Copyright © 2013 John Wiley & Sons, Ltd.

A stochastic framework for reactive power procurement market, based on nodal price model

A new modified nodal pricing method is presented in this paper to calculate reactive power price. This article tries to solve the problems of traditional nodal pricing methods to be able to consider opportunity and availability costs for the generators. A modified model of generators reactive power production cost has been used in OPF objective function considering normal and contingency conditions. Availability cost would be estimated considering the volume of network demand from the generators in contingency states through probability calculations. This cost would be paid to all the units that possibly will needed to produce reactive power in contingency states. Purvey of required availability of generation units to deal with emergency conditions, encouraging providers to invest in critical areas in the network and fair distribution of reactive power production costs over several producers are some advantages of the proposed method. The proposed method is tested on IEEE 24 bus RTS and is compared with the uniform pricing method.

Savings to Sustainability: Application of a Novel Approach to Delivering a Sustainable Built Environment

This paper presents a novel finance project delivery concept, savings to sustainability (S2S), that bridges the existing gaps between energy projects implemented using alternative financing mechanisms, sustainability initiatives, and greenhouse gas (GHG) reductions. Bridging these three areas will have a synergistic effect in terms of meeting federal and other agency goals for energy, water, and GHG reduction. The most common finance project delivery method used in the federal sector to date is the energy savings performance; however, these contracts are driven by financial, rather than energy consumption or GHG, savings. The aggressive requirements pertaining to sustainability and GHG reduction goals requires an integrated and more holistic approach to retrofit and renovation projects. The S2S finance project delivery method enables existing buildings to achieve net zero carbon through a phased approach that begins with energy and water efficiency, then on-site renewable power generation, and finally green power procurement. We present here two case studies implementing key elements of the S2S concept; the first is a federal agency project covering three campuses in Puerto Rico, the second is a university campus in central California.

Exploring expert confidence in cost estimates for nuclear power engineering, procurement and construction projects - a survey of nuclear industry experts

Nuclear power is currently undergoing a renaissance because of increasing energy demand and the ability of nuclear power to provide low-emissions, base-load power supply. However, the industry has been historically plagued with considerable technology deployment risks, with project cost and schedule overruns presenting a significant risk to nuclear plant investors. Considerable uncertainties exist with new nuclear power deployment, and there is a lack of a standardised industry approach to characterising, assessing and acting on these uncertainties to limit the variability on eventual project performance. This study identifies the major causes of risks in nuclear power plant deployment projects, and the role of project risk-management, as defined as the framework for creating awareness, assessment and action on risk. The study is performed through both a literature review of nuclear power plant project risk documentation, interviews with subject matter experts and a survey of a cross section of nuclear industry experts.

Reactive Power Management and Regional Reactive Load Forecast in Turkish Electricity Energy Market

In deregulated power systems, isolated system operators are responsible for providing the limits of active power flow and bus voltages on transmission lines. Reactive power management has very significant role for isolated system operators because of not only operating the power system safely and bus voltages and transmission line loadings in limit values, but also minimizing costs of the system. The aim is to emphasize the significance of reactive power in electricity market. In this study at first reactive power issue is generally approached, and then economic and technical issues of reactive power procurement are stated. Reactive power pricing and some boundaries are also explained for Turkish electricity market. At the end of this study, reactive load is forecasted for 2011-2015 years in European Land of Istanbul through least mean squares method. In coming four years reactive power compensation for that region will have been resolved.

A novel value based reactive power procurement scheme in electricity markets

Good reactive power management is essential for the secure operation of power systems and reactive power support is considered as an essential system support service for competitive electricity power markets. Analyzing the cost of providing reactive power service and establishing appropriate pricing structure are important both financially and operationally for reactive power procurement. In order to procure reactive support competitively from the markets, it is necessary to quantify the price of the reactive power source output. This paper presents an algorithm for procuring reactive power from reactive resources based on a reactive power pricing structure. The algorithm takes into account reactive power capacity and production costs as well as the value of reactive power. Results on a sample test system illustrate the feasibility and validity of the algorithm.

Design of power purchase under transmission congestion

PurposeThe non‐storable nature of electricity and the increasing complexity of financial instruments as a tool for hedging against risk make the area of research very useful in the real world. Many power portfolio optimization problems have been developed to combat the issue of risk tolerance, but very few (if any) have included transmission constraints. The purpose of this paper is to consider optimization of portfolios of real and contractual assets, including derivative instruments, in a multi‐period setting where transmission constraints also exist.Design/methodology/approachRather than using a flowgate constraint as a representation of transmission congestion, the authors use fixed transmission rights. A model is introduced that involves a three‐node unidirectional network in order to evaluate the significance of transmission constraints. Data from the PJM, which is located in the eastern USA, were used for model implementation.FindingsThe stochastic nonlinear mixed‐integer model presented shows that transmission constraints and fixed transmission rights can have a significant effect on the choices a utility will make when dealing with power procurement. It is demonstrated that the inclusions drastically decrease the value of the objective function.Research limitations/implicationsConditional value at risk (CVaR) was chosen over VaR as a risk measurement for two different reasons. First, it is important to have a good representation of the trade‐off between the best expected profit and the volatility experienced when obtaining that profit. Second, it provides protection against very undesirable scenarios that may occur with low probability. In order to simplify the fixed transmission rights contracts, a three‐node network is used with unidirectional flow.Practical implicationsWhen markets were regulated, transmission lines were owned and operated by local utilities, and all power sent over the lines was either owned by the operating utility or wheeled for another utility based on existing agreements. With the advent of deregulation, utilities were forced to wheel other companies' power, which introduced more risk in terms of transmission constraints.Originality/valueThe contribution of this research is to help companies not only hedge the risk of unknown power prices but also unknown transmission congestion. One distinctive feature of the authors' research is to expand upon existing “power portfolio optimization with risk” literature by introducing a transmission constraint into the model. Historically, transmission congestion has been modeled in different ways, including flowgates, transmission rents and fixed transmission rights.

A Procurement Market Model for Reactive Power in the Electricity Sector

This paper discusses various issues in reactive power management in deregulated electrical market. Reactive power procurement model is proposed which ensure secure and reliable operation of deregulated power system. A two-level framework for the operation of a competitive market for reactive power services is considered. It is argued that the first-level, i.e., reactive power procurement, be on a seasonal basis while the second level, i.e., reactive power dispatch, be close to real-time operation. This framework can be adopted for any type electricity market. It can be implemented in Indian restructuring electricity market in the near future.

Probabilistic reactive power procurement in hybrid electricity markets with uncertain loads

This paper presents a novel probabilistic algorithm for optimal reactive power provision in hybrid electricity markets. The proposed algorithm is a six-stage multiobjective nonlinear constrained optimization problem which takes into account load forecasting inaccuracies. Considering a set of probable forecasted loads, a three-component expected total market payment function is suggested being minimized as cost function of the first stage. Besides economic issues, expected voltage security margin, deviation from multilateral and pool based energy transactions, deviation from spinning reserve contracts, having adequate local reactive power reserve in each voltage control area of the system and transmission congestion probability are well thought out in stages 2–5 as technical aspects of the market. Finally, in the last stage, using different weighting factors to compromise between all objects, a probabilistic multiobjective function is presented to find the best reactive power market schedule. The proposed algorithm is applied on IEEE 24-bus test system. As a benchmark, Monte Carlo Simulation method is utilized to simulate the market of given period of time to evaluate results of the proposed algorithm, and satisfactory results are achieved.

Transmission Expansion Planning Including Reactive Power Procurement in Deregulated Environment

This article proposes a novel approach for transmission expansion planning in pool-based deregulated electricity markets. The transmission expansion planning problem is formulated as an optimization problem consisting of minimization of annualized investment cost of prospective transmission lines and maximization of social welfare as an objective function, subject to operational and security constraints. Reactive power procurement cost to be paid to the generator companies, in addition to commonly used real power generation cost of generator companies and benefits of distribution companies/bulk consumers, have also been considered in the social welfare function. The reactive power procurement cost needs to be included in the social welfare function in order to pay compensation to generator companies for their reactive power supply in a deregulated environment. The proposed method for transmission expansion planning takes into account a number of potential scenarios on the basis of an annum and is solved by a mixed-integer non-linear programming method as well as by a proposed iterative two-stage approach. The effectiveness of proposed approach is tested on Garver's 6-bus, the IEEE 24-bus reliability test, the IEEE 57-bus, and the IEEE 118-bus systems. The comparisons of the proposed approach are presented (a) without including reactive power procurem cost in the present formulation and (b) with an existing DC formulation based transmission expansion planning approach.

Reactive Power Provision in Electricity Markets Considering Voltage Stability and Transmission Congestion

This article presents a new algorithm for optimal reactive power procurement in pool electricity markets. Due to the significant impact of reactive power flow on the system voltage stability and transmission loss, the objective function of the proposed algorithm is minimization of the market payment for reactive power and system energy loss, simultaneously maximizing voltage stability margin. Moreover, as another object, the algorithm tries to decrease the probability of the transmission congestion during reactive power market clearing. A four-step multi-objective mixed-integer non-linear programming technique that uses the genetic algorithm in combination with a sequential quadratic programming method is implemented in MATLAB (The MathWorks, Natick, Massachusetts, USA) to solve the proposed problem. Numerical studies on the IEEE-RTS test system show the suitability of the proposed method.

Design of reactive power procurement in deregulated electricity market

Reactive power management is required to support real power shipment, providing reserve for voltage security and supplying reactive loads. Reactive power management is different in the deregulated electricity market of various countries. In this paper, a novel reactive power procurement model is proposed, which ensure secure and reliable operation of deregulated electricity market. Various issues of reactive power management in the deregulated electricity market have been discussed. A reactive power bid, reactive capability of a generator has been discussed in the context of procurement reactive power model. A two level framework of the reactive power is proposed. The first-level of the proposed model, i.e. reactive power procurement, to be done on (few months ahead)advance basis from real time operation with an objective of minimization of reactive generation cost followed by maximization of its Societal Advantage Function(SAF) while considering the second-level, i.e., reactive power dispatch in tandem with real-time operation. The IEEE 24-bus RTS test system is used to illustrate the proposed reactive power procurement. The offers of generation have been considered by minimization of reactive generation cost followed by maximization of Societal Advantage Function.

Reactive power market management considering voltage control area reserve and system security

This paper presents a new algorithm to optimize reactive power procurement through commercial transactions considering system voltage security. The proposed algorithm minimizes reactive power provision and transmission loss costs in addition to maximizing system voltage security margin through a multiobjective function. In order to maintain the voltage profile of power system during sever contingencies or due to load uncertainty, all voltage control areas (VCA) of the system are detected and then optimal reactive power reserve is provided for each VCA during the market settlement. A four-stage multiobjective mathematical programming method is proposed to settle the reactive power market. The proposed algorithm has been applied on IEEE-RTS test system. The simulation results show the effectiveness of the proposed algorithm for reactive power market management.

Two-stage optimization algorithm for short-term reactive power planning based on zonal approach

There are various methods for procurement of reactive power as an ancillary service in deregulated market environment. Reactive power market model based on voltage control zones and two-step optimal power flow algorithm is proposed in this paper. Zones are formed by splitting the power system or a control area of an interconnected power system into autonomous voltage sub-areas with sufficient reactive power reserves using the electrical distance method. Every zone formes a single reactive power market. First step of an optimization algorithm determines zonal reactive power prices based on generator's cost functions for reactive power production. Total cost minimization is the goal of the second optimization step where the final dispatching decision is made according to transmission losses and zonal reactive power prices respecting power system planned conditions and security constraints. Proposed algorithm is tested on IEEE 39 bus test system ensuring the system operator's minimal payment for reactive power and transmission losses, without jeopardizing power system security.

요일 요인을 고려한 하절기 전력수요 예측

이 논문에서는 여름철 일일 전력수요 총량을 예측하는 회귀모형을 개발한다. 경제적인 전력 생산계획을 수립하기위해 예측 오차율을 낮추는 것은 매우 중요하다. 전력수요가 크게 증가하는 여름철 전력수요를 예측하기위해 기존 연구에서는 외기온도 및 직전일 전력수요를 고려하였으나, 이 논문에서는 기존 연구에서 제시한 예측 오차율을 개선하기 위해 전력수요의 요일별 특성을 추가적으로 고려한 회귀모형을 개발한다. 이 논문에서는 여름철 전력수요의 요일별 패턴은 최고차항의 계수가 음수인 2차 함수 형태를 나타냄을 확인하였다. 즉, 2005년부터 2009년까지 5년간의 여름철 전력수요 패턴을 살펴본 결과 전력수요 총량은 일요일에 가장 낮고 월요일부터 증가하다가 수요일이나 목요일부터 다시 감소하는 패턴을 보인다. 이 논문에서 제안하는 여름철 전력수요 예측 회귀모형의 타당성을 검증하기 위해 2005년부터 2009년까지 실제 전력수요 데이터를 바탕으로 여름철 전력수요 총량을 예측한 결과, 평균 오차율(MAPE: Mean Absolute Percentage Error)과 최대 오차율(MPE: Maximum Percentage Error)이 각각 3.08%와 8.99%를 넘지 않는 수준임을 확인하였다. 또한 기존 연구에서 제시한 방법과 비교하여도 평균 오차율과 최대 오차율 모두 기존 연구에서 제시한 오차율보다 우수함을 확인하였다. In this paper, we propose a quadratic (nonlinear) regression model that forecasts daily demands of electric power in summer. For cost-effective production (and/or procurement) of electric power, forecasting demands of electric power with accuracy is important, especially in summer when temperature is high. In the literature, temperature and daily demands of preceding days are typically employed to construct forecasting models. While, we consider another factor, day of the week, together with temperature and daily demands of preceding days. For validating the proposed model, we demonstrate the forecasting accuracy in terms of MAPE(Mean Absolute Percentage Error) and MPE(Maximum Percentage Error) using field data from KEPCO(Korea Electric Power Corporation) in comparison with two forecasting models in the literature. When compared with the two benchmarks, the proposed forecasting model performs far better providing MAPE and MPE not exceeding 3.08% and 8.99%, respectively, in summer from 2005 to 2009.

Social Welfare Maximization Considering Reactive Power and Congestion Management in the Deregulated Environment

This article addresses two well-known problems of competitive electricity markets: (1) reactive power procurement and (2) congestion management, using social welfare maximization in pool based competitive electricity markets. The social welfare function, which customarily consists of the benefit function of consumers and cost function of real power generation, is modified to include the cost function of reactive power generation. This will incorporate an economic signal regarding production and consumption of reactive power within locational marginal prices payable to the suppliers and chargeable from the consumers at different locations. The reactive power cost function of a synchronous generator is modeled using the lost opportunity to trade real power to produce required amount of reactive power. An approximate P-Q capability curve of the synchronous generator is used for this purpose. Further, the effect of incorporation of consumers' benefit bids on managing system congestion at an acceptable level is demonstrated with the help of decomposition of locational marginal prices of real and reactive power into energy/reference, loss, and congestion components. The effectiveness of the technique is tested on a 5-bus system and an IEEE 118-bus system. A discussion is presented to explain and compare the results obtained.

Oligopolistic Competition of Gencos in Reactive Power Ancillary Service Provisions

The need for a market based approach for reactive power procurement has been recognized by FERC. Due to the localized characteristic of reactive power, regulatory mechanisms are necessary to mitigate the possibility of holding market power by generators. The regulator is responsible for devising the regulatory mechanisms that provide incentives to generators to supply reactive power while preventing the abuse of market power. This paper proposes a mathematical model to simulate the strategic behavior of generators supplying reactive power while considering the system operator's schedule. The proposed method can be used by the regulator to simulate the market behavior in the reactive power supply. We further study how regulatory policies affect the strategic behavior. An alternative price cap method has been proposed and tested in the numerical example to mitigate the effect of strategic behavior of generators in reactive power procurement by the system operator. The numerical examples are tested on the Nordic 32-bus system.

The Shifting Face of Violence

ly peaceful times. Organized violence was throughout most of history, both in absolute and relative terms, a much more prevalent part of mankind’s daily life than today— from antiquity to the twentieth century. European integration has pacified the old continent. The creation of the United Nations has provided us with an instrument of collective security that can, if permitted, work. The threat of an all-out nuclear exchange has receded. Still, conflict, in its traditional form of organized violence between two states or coalitions of states, continues to exist. Examples include the Iraqi invasion of Kuwait, the U.S. campaigns against Saddam Hussein’s Iraq, and the possibility of a U.S.-Israeli attack against Iran’s emerging nuclear capabilities. A significant amount of the world’s military power and arms procurement is still invested in coping with such contingencies. It cannot be excluded that the risk of traditional conflict might grow again in the years to come. Should the United States—in many respects the world’s de facto hegemon—be perceived as being increasingly tied down in Iraq, Afghanistan, and possibly other critical hot spots, and thus be seen as unable (or unwilling) to react to new challenges, then the temptation would develop for many to seize the initiative and create military faits accomplis. One may argue that the Iranian nuclear program is just such an attempt. Most conflicts in the twenty-first century, however, are no longer of a traditional nature. They are no longer fought between states, but between a government and such forces as politically or ethnically based militias and armed bands, guerrilla or terrorist organizations, clans, warlords, organized communal groups, or simply criminal gangs. An increasing number of conflicts are even being conducted between such groups themselves—with little, or only indirect, government involvement. The phenomenon of disintegrating, failed, or faltering states—from the Western Balkans and Somalia to West Africa and Darfur—has led, particularly in the second half of the 1990s, to violence at a level unheard of for quite some time. We are confronted by a multiplication of actors, issues, and means, leading to new conflict patterns and an increase of conflicting matters at stake. The trend will continue to build in the next 25 years. Such non-traditional conflicts, moreover, prove difficult to extinguish. The most striking example is clearly the ongoing strife between Israel and the Palestinians. Theodor H. Winkler is the director of the Centre for Democratic Control of Armed Forces in Geneva with the rank of ambassador and previously served as head of the Division for International Security Policy of the Swiss Department of Defence.

A Procurement Market Model for Reactive Power Services Considering System Security

This paper proposes a two-level framework for the operation of a competitive market for reactive power ancillary services. It is argued that the first-level, i.e., reactive power procurement, be on a seasonal basis while the second-level, i.e., reactive power dispatch, be close to real-time operation. To this effect, a reactive power procurement market model is proposed here taking into consideration system security aspects. This procurement procedure is based on a two-step optimization model. First, the marginal benefits of reactive power supply from each provider with respect to system security are obtained by solving an optimal power flow (OPF) that maximizes system loadability subject to transmission security constraints imposed by voltage limits, thermal limits, and stability limits. Second, the selected set of generators is then determined by solving an OPF-based auction to maximize a societal advantage function comprising generators' offers and their corresponding marginal benefits with respect to system security, considering all transmission system constraints. The proposed procedure yields the selected set of generators and zonal price components, which would form the basis for seasonal contracts between the system operator and the selected reactive power service providers.

Evaluation of electric power procurement strategies by stochastic dynamic programming

AbstractIn deregulated electricity markets, the role of a distribution company is to purchase electricity from the wholesale electricity market at randomly fluctuating prices and to provide it to its customers at a given fixed price. Therefore, the company has to take risk stemming from the uncertainties of electricity prices and/or demand fluctuation instead of the customers. The way to avoid the risk is to make a bilateral contract with generating companies or install its own power generation facility. This entails the necessity to develop a certain method to make an optimal strategy for electric power procurement.In such a circumstance, this research proposes a mathematical method based on stochastic dynamic programming and considers the characteristics of the start‐up cost of an electric power generation facility to evaluate strategies of combination of the bilateral contract and power auto‐generation with its own facility for procuring electric power in a deregulated electricity market. In the beginning we proposed two approaches to solve the stochastic dynamic programming, and they are a Monte Carlo simulation method and a finite difference method to derive the solution of a partial differential equation of the total procurement cost of electric power. Finally we discussed the influences of the prime uncertainty on optimal strategies of power procurement. © 2007 Wiley Periodicals, Inc. Electr Eng Jpn, 160(2): 20–29, 2007; Published online in Wiley InterScience (www.interscience.wiley.com). DOI 10.1002/eej.20296