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1, FEBRUARY 2006


Impact on Real and Reactive Power Pricing in Open Power Market Using Unified Power Flow Controller
K. S. Verma and H. O. Gupta, Senior Member, IEEE
Abstract—Transmission pricing is an important issue in view of increased deregulation. A nonlinear optimization problem has been formulated to maximize the social welfare in the open power market using a unified power flow controller (UPFC) in this paper. With a static point of view, congestion management installation of UPFC requires a two-step approach. First, the proper location of these devices in the network must be ascertained and then the settings of its control parameters optimized for the required objective. Nodal spot prices for both real and reactive powers have been computed using optimal power flow solutions, and the impact of UPFC on the spot pricing have been studied. The effectiveness of the proposed methods is demonstrated on a test system. Index Terms—Nodal pricing, optimal power flow (OPF), unified power flow controller (UPFC), UPFC location.



N the present pace of power system restructuring, transmission systems are being required to provide increased power transfer capability and to accommodate a much wider range of possible generation patterns. Environmental, right-of-way, and cost problems are major hurdles for power transmission network expansion. Hence, there is an interest in better utilization of available power system capacities by installing new devices such as flexible ac transmission systems (FACTS). FACTS devices can be an alternative to reduce the flows in heavily loaded lines, resulting in an increased loadability, low system loss, improved stability of the network, reduced cost of production, and fulfilled contractual requirement by controlling the power flows in the network. Power systems, all over world, have been forced to operate in almost their full capacities due to the environmental and/or economical constraints to build new generation centers and transmission lines. The amount of electric power that can be transmitted between two locations through a transmission network is 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 because angular instability, voltages instability, or cascaded outages. The system is said to be congested when such a limit is reached. Managing congestion to minimize the restrictions of the transmission network in the market of electrical energy has thus become the central activity of power system operators. The role of FACTS in the open power market

Manuscript received February 5, 2003; revised April 6, 2003. Paper no. TPWRS-00059-2003. K. S. Verma is with the Kamla Nehru Institute of Technology, Sultanpur, UP, India and also with the Indian Institute of Technology, Roorkee 247667, India (e-mail: H. O. Gupta is with the Department of Electrical Engineering, Indian Institute of Technology, Roorkee 247667, India (e-mail: Digital Object Identifier 10.1109/TPWRS.2005.857829

is to manage the congestion, enhancing security, reliability, increasing available capability, controlled flow of power, and other system performances. Congestion in a transmission system, whether vertically organized or unbundled, cannot be permitted except for a very short duration, for fear of cascade outages with uncontrolled loss of load. If there is no congestion, the placement of FACTS devices, from the static point of view, can be decided on the basis of reducing losses, but this approach is inadequate when congestion occurs. A method based on the real power flow performance index (PI) has been used in this paper for this purpose due to security and stability reasons. A method [7]–[9] for the suitable locations of unified power flow controller, with a static point of view, has been used in these papers for different objectives, based on the real power flow performance index sensitivity with respect to control parameters of the unified power flow controller (UPFC). In [12], a steady-state model of UPFC (power injection model) has been used and introduced in the minimum price dispatch algorithm. Optimization has been performed with the system operating constraints. Transmission pricing has been an important issue in the ongoing debate about power system restructuring and deregulation. The purpose of pricing is to recover cost of transmission and to encourage efficient use and investment. Limited efforts have been made to study the impact of UPFC on transmission charges. Optimal power flow (OPF)-based spot pricing is an important method. Choi et al. [13] presented a theory and simulation results of real-time pricing of real and reactive powers that maximize social benefits. Lima et al. [14] considered the dynamic aspects of pricing and its impact on long-term expansion planning of both generation and transmission. In the same paper, FACTS devices have shown an ability to change the production cost and their impact on transmission charges. The effect of FACTS devices on transmission charge varies according to the pricing methodology adopted. FACTS devices had the ability to reduce the overall operating cost and their impact on transmission pricing. Srivastava and Verma [15] utilize locational-based pricing concepts and have suggested a nonlinear programming problem formulation to determine real and reactive power prices. However, they have taken thyrister-controlled series compensator (TCSC) and static var compensator (SVC) to see their impact on transmission pricing. Thus, attention is focused only on the UPFC in this paper. This paper presents a novel methodology to locate the UPFC for congestion management in the deregulated power sector and presents a nonlinear optimization problem formulation with UPFC to see the impact on transmission real and reactive spot pricing. The proposed algorithm has been demonstrated on a modified IEEE 30-bus test system.

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1. in which the performance index for a case with many small violations may be comparable in value to the index for a case with one huge . Most of the work on contingency selection algorithms utilizes the second-order performance bus.366 IEEE TRANSACTIONS ON POWER SYSTEMS. and a real nonnegapacity of linetive weighting coefficient that may be used to reflect the imporis the total number of lines in the network. as given in the following: PI (12) (1) where is the real power flow and is the rated cais the exponent. This voltage source can internally generate or absorb all the reactive power required by the different type of controls applied and transfers active power at its dc terminal. VOL. 3 can be obtained. Converter 1 can also generate or absorb reactive power at its ac shown in Fig. in general. the magnitude and the angle and the magnitude of the current of inserted voltage . The equivalent circuit of UPFC placed in line. with proper control. The inverter output voltage injected in series with line can be used for direct voltage control. The schematic representation of the UPFC is shown in Fig. Converter 2 is used to generate a voltage source at the fundamental frequency with variable amplitude and phase angle . Schematic diagram of UPFC. Converter 1 is primarily used to provide the real power demand of converter 2 at the common dc link terminal from the ac power system. the injected equivalent circuit of Fig. Therefore. with (1)–(3). 2.can be written as (2) (3) Active and reactive power flows in the line having UPFC can be written. which. UPFC MODEL The basic principles of operation of the UPFC are already well established in the literature [3]–[5]. 21. the basic mathematical relations can be given as Arg Arg Arg and Arg Re (8) (9) (10) (11) III. (4) (5) Fig. 1.and from busto bus. which is independent of the active power transfer to (or from) the dc terminal. It consists of two voltage source converters and a dc circuit represented by the capacitor. NO. 2. and their combinations. it can also fulfill the function of an independent advanced static VAR compensator providing reactive power compensation for the transmission line and thus executing indirect voltage regulation at the input terminal of the UPFC. The injected active power at busand busand reactive powers ( and ) of a line having a UPFC are II. 1. phase shifter. (6) (7) From basic circuit theory.connected between bus. LOCATION OF UPFC The severity of the system loading under normal and contingency cases can be described by a real power line flow performance index [16]. series compensation. suffer from masking effects. namely.and bus. FEBRUARY 2006 The power flow equations from bus. Equivalent circuit of UPFC. The lack of discrimination. as Fig. tance of the lines. Based on the principle of UPFC and the vector diagram. UPFC has three controllable parameters. which is added to the ac transmission line by the series-connected boosting transformer.

the normal dispatch problem can be written as (22) where set of pool generator buses. The masking effect to some extent can be avoided by using higher order performance . that is. the following relationship can be derived for for (15) The terms 1) Equality Constraints: Power flow equations corresponding to both real and reactive power balance equations are . Observe that line. . violation.. REAL AND REACTIVE SPOT PRICING The objective of pricing policy is to maximize the benefit of all the participants. as illustrated in . where the marginal values are determined by maximizing total surplus of utilities and consumers. and are given by Fig. the sensitivity of PI with respect to UPFC param( . due to the presence of the device. in this paper.and buseter can be written as PI (13) can be represented in The real power flow in a lineterms of real power injections using dc power flow equations [16] where is slack bus. Mathematically. Injection model of UPFC. subject to the operational constraints. as for for (14) where is the th element of matrix that relates line flow with power injections at the buses without UPFC. The angle difference for both ends of the line are generally very small. at bus. A. and it is limited to 30 due to stability reasons. is the line containing the UPFC. Using (13) and (14). therefore. is known as the masking effect. in the line Fig.. IV. This is accomplished by setting the prices of real and reactive powers at each bus at a particular time equal to the marginal values of supplying and consuming real and reactive power at the same bus and at the same time. bid price of pool load. and ) connected between bus. and can be obtained using (8) and (9).. The real power flow PI sensitivity factors with respect to the control parameters of UPFC can be defined as PI PI PI PI sensitivity with respect to (16) (17) (18) (19) (20) (21) PI sensitivity with respect to PI sensitivity with respect to The sensitivity factors . The derivatives of real and reactive power with respect to the phase angle of UPFC are considered around zero. to maximize the consumers and producers’ surplus. containing the UPFC. is the addition flow. However. active power of pool generator. the value of the indices. It was found that the exponent has been taken as 2 and masking effect was removed with this value for the considered examples. bid price of pool generator. set of pool load buses. and is the number of buses in the system.. Operating Constraints Using (12). that is. 3. The real power flow performance index gives a good measure of the system congestion during the normal operating condition... respectively. subject to operational bus. from bus. although the phase angle in UPFC can be control from 0 to 360 . and can be obtained using (16)–(21). active power of pool load.VERMA AND GUPTA: IMPACT ON REAL AND REACTIVE POWER PRICING 367 .. 3.

.e. 21. for all the buses except buses and in which UPFC is connected. . reactive power load at bus. th element of Y-bus matrix. 2) Inequality Constraints: 1) Power generation limit: This includes the upper and lower real power limit of generators (29) where and are the minimum and maximum limits of real power generation at bus. real power generation at bus... respectively. and as for generator buses.. NO.. Imposing phase angle limits at load buses is another way of limiting the power flow in the transmission lines. reactive power injection at bus. and . 1.. The line flow limit can be written as (33) (27) 6) UPFC control parameter limits: The voltage magnitude and phase angle of series voltage of UPFC must lie within the limit.. real power load at bus. control parameters. 5) Line flow limits: These constraints represent the maximum power flow in a transmission line and are usually based on thermal and dynamic stability considerations. be the maximum active power flow in line... viz..368 IEEE TRANSACTIONS ON POWER SYSTEMS. reactive power generation at bus.. it can be written as (34) (35) Reactive power component of shunt current also be less than its rating should (25) (26) (28) where real power injection at bus.. this is done for stability reasons. i. and be 2) Reactive power generator limit: Let the maximum and minimum reactive power generation (36) Mathematically. (38) (39) . VOL. viz. . fixed parameters. load angle at bus. the equality constraints can be written as 4) Phase angle limits: The phase angle at each bus should be between lower and upper limits (32) These limits may vary. FEBRUARY 2006 the equality constraints that can be written. . respectively. (22)–(36) can be written as (37) subject to equality constraints inequality constraints where state vector. voltage magnitude at bus. depending upon the problem under consideration. number of reactive power sources in the system. mathematically it can be written as (30) (23) 3) Voltage limit: This includes the upper limits on the bus voltage magnitude and lower (31) (24) For buses and . Let respectively. as limits of reactive source generator. Mathematically.

the wheeling rate for real power is given by MC MC (44) Similarly. and cents is a monetary unit that may be scaled by any arbitrary constant without affecting the results. The sensitivities of real power flow performance index with respect to UPFC control parameters are presented in and are preTable II. wheeling charges for the purchase of real power and reactive power are given as WC WC (46) (47) NAG Fortran Library E04UCF was used for solving the above OPF problem. but the phase angle will be negative as the flow of power in this line should be reduced. SIMULATION RESULTS The proposed method has been tested on a modified IEEE 30-bus system.2 MW. The optimal generation schedule without line flow constraints was found to be G1:170. Line 1-2 will be the next choice after line 27-11. their placement (40) where . The will not be as effective as the range congestion control with of control is limited. which also can show that sensitivity is positive.are the marginal costs associated with the corresponding load flow equations when the OPF (with and without FACTS devices) are solved as a nonlinear programming problem. However. the sensitivities were calculated for each control parameter of UPFC placed in every line one at a time. Line 27-11 is suitable for control of the UPFC phase angle.40 MW.are given by (41) The spot prices at load buses will be (42) Similarly.4 MW. V.10. With this generation schedule.VERMA AND GUPTA: IMPACT ON REAL AND REACTIVE POWER PRICING 369 The Langrangian of this optimization problem is as follows: TABLE I GENERATOR DATA MC and MC are the marginal costs of real and reactive power at a buyer bus. DETERMINATION OF SPOT PRICING The prices for active and reactive powers at bus. The phase angle control of UPFC can be utilized for congestion management. the wheeling rate for reactive power is given by MC MC (45) Similarly. as it requires an optimization tool for getting optimal control parameters of the device. and G3:55. At a particular time.95–1. the UPFC will be suitable either in line 21-22 if we consider controlling the inserted voltage magnitude of UPFC. VI. The prices bid by generators are given in Table I. It can be seen from Table II that for the congestion management. Based on sensitivities. The proposed method does not suggest the interaction of several UPFC devices placed in the system. Voltage magnitudes at load buses are kept within the range of 0. where is in megawatts. The value of sensitivity will be zero as has very little effect on power flow. at bus. real time of price of real power and that of reactive power. this method is suitable for suggesting the candidate lines for UPFCs. G2:58. while MC and MC are at the seller bus. are Lagrange PI multipliers of respective constraints. the reactive power spot pricing at load bus will be (43) . The highest negative sensitivities sented in bold type.

The Lagrange multipliers for the real power equations of the load flow are invariably positive. 4. described in Section IV with UPFC in line-33. 1. for reactive power. as can be seen from Fig. 4 and 5. The placement of FACTS devices from a static point of view only has been considered. line-27. it is observed that the real and reactive power spot prices change drastically due to placement of the . was obtained and presented in Table III. 4. and of UPFC in line-11 gives a lower pool generation price compared to other cases. The generation cost as well as the real power spot price is less when the UPFC is placed in line-11 compared to placing it in other lines. Both the real and reactive power spot prices can be analyzed as a combination of different price components. This paper has considered constant real and reactive power loads. and line-11. they may be either positive or negative. Dynamic consideration of these devices also can be explored. VOL. the optimal value of the phase angle of UPFC placement in lines 33.. taken one at a time. 21. However. Table III also shows the optimal dispatch without UPFC devices (base case). FEBRUARY 2006 TABLE II SENSITIVITY C AND C TABLE III OPTIMAL GENERATION SCHEDULE (MVA) Fig. It shows the reactive power spot prices at load buses. the Lagrange multipliers corresponding to the equality constraints may. 5. From Figs. an iterative procedure can be adopted. be either positive or negative. 4 and 5. The variation of optimal pool real power generation with each UPFC device is very small. Lagrange multiplier corresponding to real and reactive power load flow equations) are shown in Figs. 5. can be ascertained in few areas. respectively.370 IEEE TRANSACTIONS ON POWER SYSTEMS. a more accurate customer response can be modeled using generalized and practical load models. however.729. However. It is true for reactive power price also. in general. The placement 11 were 5. it was observed that placement of the UPFC device gives a lower real power spot price for all the load buses.72. From Fig. These figures show that reactive prices are more effective than real power price. To see the interaction of different UPFCs. NO. 27. Prices at the load bus can be lower also if that particular load relieves the flow on the network.e. Real power spot prices (cents/megawatthour) at load buses. respectively. Also from the optimization theory. and . The optimal dispatch. The nodal real power and reactive power spot prices at load buses that were obtained directly from optimization algorithm (i.

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