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Lecture Notes Optimization Techniques in Deregulated Market

Lecture Notes Optimization Techniques in Deregulated Market

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Dr. R. GNANADASS, BOYSCAST Fellow Assistant Professor, EEE Department Pondicherry Engineering College, PUDUCHERRY – 605 014 E-Mail – gnanadass@yahoo.com The objective of this lecture is to explore the applications of the Artificial Intelligence techniques to solve the technical challenges of deregulated power industry. 1.1. INTRODUCTION

Throughout the world, electric power utilities are currently undergoing major restructuring process and are adopting the deregulated market operation. Competition has been introduced in power systems around the world based on the promise that it will increase the efficiency of the industrial sector and reduce the cost of electrical energy of all customers. Electrical energy could not be stored in large quantities. Continuity of supply is sought as more important than the cost of the electrical energy. To meet the growing power demand, electric power industry has to adopt the deregulated structure. For integrated operation of deregulated system, regulating agencies such as pool operator or system operator have to be formulated. In the deregulated power market, the electricity is dispatched with the help of either by a separate power exchange or the system / pool operator. The power system deregulation is expected to offer the benefit of lower electricity price, better consumer service and improved system efficiency. However, it poses several technical challenges with respect to its conceptualization and integrated operation. Basic issues of ensuring economical, secured and stable operation of the power system, which can deliver the power at desired quality, has to be addressed carefully in a deregulated market. The complexity is more in such an arrangement. Power systems, all over the world, have been forced to operate to their full capacities due to the environmental and / or economical constraints. This results in the need of new generation centers and transmission lines. The amount of electric power that can be transmitted between two locations through a transmission network is also limited by security constraints. Power flows should not be allowed to increase to a level where a random event could cause the network to collapse due to overloading, angular instability, voltages instability or cascaded outages. This state of the system is called as congestion of the power system. Managing congestion to minimize the restrictions of the transmission network becomes the central activity of power system operators in recent years.

The electric supply industry in every country for about the last one hundred years has been a natural monopoly and as a monopoly attracted regulation by government. obligations. It consists of the regulatory structure. Independent System Operator (ISO). A. In a monopolistic market. This concept is gaining deep attention which desire to introduce competition into traditional regulated utilities without giving up their existing regulatory structure. So wheeling is currently a high priority problem in both regulated and deregulated power industries. while the power is transferred through the network. Before entering into the details of the work. transmission and distribution facilities.2 The deregulation of the electric utility industry allows many independent power producers (IPP) to be connected across the transmission system. Transmission Open Access (TOA) is an important step for the translation of conventional power systems to a deregulated power system. 1. Such a deregulated system study is carried out in the present thesis work. operational procedures and economic conditions of the system and enables two or more parties to use the transmission network for electricity power transfer of another party. distribution as well as control. satisfying consumer’s demands at proper voltage and frequency level. This situation also calls for effective methods to ensure the transmission system reliability. maintaining security. In the beginning. It was also a local monopoly. important terms used have been explained in the following section. In the conventional market. This involves in heavy pricing over the customer. the single utility is responsible for maintaining physical flow of electricity. transportation.C. The deregulated power system is to give opportunity to the customer to buy energy at a more favorable price. In a deregulated environment. a supreme entity for the control of transmission system. also needs to know such costs in order to make correct economic and engineering decisions on upgrading the transmission facilities. The major difference between conventional monopolistic electricity market and the emerging deregulated market is that electricity in the former case is considered as merely energy supply sector. in the sense that in any area one company or government agency sold electric power and services to all customers. which includes transmission right. the same agency is responsible for power generation. whereas in the new market structure these tasks are segregated and have to be separately paid by the transacting parties. it is very much important that sellers and buyers of electricity need to find the cost allocation to their wheeling transactions. there are many simultaneous bilateral and multilateral transactions in addition to power pooling. economy and reliability of the system. In the new . In such transmission. Without exception. As energy demand continues to grow. the industry has been operated as a vertically integrated monopoly organization that owned the generation. whereas in the latter case it is treated as a service sector and is to be marketed like any other common commodity. The energy demand will be the greatest in the near future. technical problems such as voltage control and dynamic stability will arise. DEREGULATION IN POWER INDUSTRY The driving force behind the development of power systems is the growing demand for electrical energy in developing countries. higher voltage levels are needed. Therefore.2. transmission has to transfer power over long distances.

including India. Open Transmission System Operation There are many variations in the deregulated scenarios for electric power systems around the world.K. spinning reserve in the system etc. Some of these ancillary services can directly be arranged by the seller / buyers of electricity. geographical or economic factors. In addition. Motivations for Deregulated Power Industry Since the 1980’s.1. 1. and the shortage of public resources for investment in developing countries. the regulatory bodies have been formed at central level and also at some of the states. changes in political and ideological attitudes. However. in addition to the primary task of the system operator and wire companies to ensure meeting the power transactions all the time. there exist different schemes for operation and regulating access to transmission systems. a limited level of competition is already introduced at generation level by allowing participation of Independent Power Producers (IPPs). providing enough voltage / VAR support. specific to each country or area. the transmission of electricity itself will be treated as a separate service and has to be changed from the transacting parties and paid to the wire companies. These are called ancillary services in the deregulated environment and have to be arranged and paid separately.e. Their primary function.. the rise of environmentalism. have already taken initial steps in this direction. South American countries. high tariffs. global financial drives. Further.3 deregulated electricity market. where it is now fully operational. shed manpower and increase customer choice. contributed to the worldwide trend towards deregulation. arranging for start-up power.2. The additional services include arranging power for the loss makeup or load following. transmission and distribution has already been done in a few states. In addition. Scandivinian countries and the USA in the 1990s. regulatory failures. Some of the Asian countries.2.2. each deregulated scheme must address the fundamental technical issues associated with the properly operating open transmission network. at present. 1. Some of the following potential technical problems before open power market are to be handled carefully. political. The differences may be due to historical. Accordingly. Many factors such as technology advances. Shortly most of the power utilities in the country will be adopting the deregulated structure in some sense. A significant feature of these changes is that it allows for competition among generators and create market conditions in the industry. . generation. many of these tasks are treated as separate services. maintaining the system frequency. eliminate certain inefficiencies. the electricity supply industry has been undergoing rapid and irreversible changes reshaping the industry that is remarkably stable and served the public well. were the first few to introduce deregulated market of electricity in the mid-eighties followed by U. separation of three organs of power system i. is to fix tariff for power sales. which are seen as necessary to reduce costs of energy production and distribution. This transition towards a deregulated power market is commonly referred to as electricity supply industry restructuring or deregulation. such as Argentina and Chile. In India. managerial inadequacy.

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