EE 553 Power System Economics

Homework 7 Solutions

Problem 1 (10 points)

(1) Since there is no congestion in the system, πA = πB under equilibrium
condition. With power balance constraint, we have following equations:
(
πA = πB = 9 + 0.015PA = 11 + 0.2PB
PA + PB = DA + DB = 300 + 900

PA = 1125.58 MW, PB = 74.42 MW, and πA = πB = 25.88 $/MWh.

(2) Without congestion, bus A would deliver FAB = 1125.58 − 300 = 825.58
MW. Due to capacity limit, FAB = 350 MW then.
Now, PA = 650 MW, PB = 550 MW, πA = 18.75 $/MWh and πB = 121
$/MWh.
(3) Revenues for generator A and B:
RA = πA PA = 18.75 × 650 = $ 12187.5
RB = πB PB = 121 × 550 = $ 66550

Total Revenue for both generators:

Rtotal = RA + RB = 12187.5 + 66550 = $ 78737.5
(4) Payments for demand A and B:
EA = πA DA = 18.75 × 300 = $ 5625
EB = πB DB = 121 × 900 = $ 108900
Etotal = EA + EB = 5625 + 108900 = $ 114525

Congestion Surplus:
(πB − πA )FAB = (121 − 18.75) × 350 = $ 35787.5
Or calculated with:
Etotal − Rtotal = 114525 − 78737.5 = $ 35787.5

Problem 2 (10 points)

(1) Due to 150 MW limit for line 1-2, the maximum flow from bus 2 to bus 1
then bus 3 is 150 MW. Then, the maximum flow from bus 2 to bus 3 is 300 MW.

1
Therefore, the maximum power can be delivered is 450 MW. It is not possible
to transfer 500 MW.
(2) Bus 2 generates 450 MW, and another 50 MW are generated from the
new generator at bus 3.
Total cost: C = 450 × 1 + 50 × 2 = $ 550

Problem 3 (10 points)

Generation needs to meet demand, we have:
PA + PB + PC + PD = D1 + D2 + D3 = 400 + 80 + 40 = 520 MW
Ignoring network limits, the least cost solution is PC = 120 MW, PD = 400
MW.
With superposition rules: bus 3 transfers 400 MW to bus 1 and 80 MW to
bus 2.
To transfer 400 MW from bus 3 to bus 1: F31 = 250 MW, F32 = 150 MW,
F21 = 150 MW.
To transfer 80 MW from bus 3 to bus 2: F31 = 30 MW, F32 = 50 MW,
F21 = −30 MW.
Sum it up, line 3-1 has 30 MW overflow.
The next cheapest generator is Generator A. If PA increases 1 MW and PC
decreases 1 MW, F31 reduces 0.375 MW.
To reduce 30 MW from line 3-1, PA = 80 MW, and PC = 40 MW.
All line flows are within their limits.
The final solution is: PA = 80 MW, PB = 0, PC = 40 MW, and PD = 400
MW.
The total operating cost: C = 80 × 12 + 40 × 10 + 400 × 8 = $ 4560