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Power Planning

Power Market

Sang-Jin Chung T &J Construction. Co. Ltd +82-10-5234-6134 sjchung@kpx.or.kr

Power System

Power Market Operation

Power Business Overview

II

Electricity Market

III

Recent Market Results

Market Issues

Copyright 2011 by KPX co., Ltd. All rights reserved.

Power Planning

Power Market

Power System

Power Business Overview


Electric Power System Generation Sites & Fuel Mix Transmission System Network Peak Demand & Capacity Margin

Copyright 2011 by KPX co., Ltd. All rights reserved.

KEY STATISTICS (2010) People served (million) Generating capacity (MW) Peak loads (MW)
Yangyang P/P Sin-Dukheun Sin-Gapyung Uijeongbu Seo-Incheon C/C Yangju Migum Sungdong Chungbu Seo-Incheon Youngdeungpo Sin-Yangje Dong-Seoul Donghae Incheon T/P, Sin-Bupyung C/C Youngseo Sin-Sungnam Sin-Incheon Gonjiam Sin-Taebaek Seo-seoul Youngheung T/P Sin-Sihung Sin-Ansan Hwasung Sin-Youngin Pyungtaek T/P, C/C Sin-suwon Uljin N/P Sin-Youngju Dangjin T/P Sin-Dangjin Sin-Ansung Sin-Jecheon Ansan Sin-Jincheon Taean T/P Cheongsong P/P Chungwon Sin-seosan Boryeong T/P, C/C Sin-onyang Sinkaedong Chungyang Gunsan Sin-Gimje Sin-Youngil Sin-Okcheon

50 76,078 71,308 30,676 406,000

Total transmission lines (C-Km) Electricity traded annually (GWh) Generators (above 20MW) CHARACTERISTICS 372 ea

Sunsan Buk-Daegu Muju P/P Sancheong P/P Sin-Namwon Euiryong Goryeong

Seo-Daegu Sin-Kyeongsan DaeguUlju Sin-Ulsan

Youngwang N/P Sin-Gwangju Sin-Hwasun Gwangyang Sin-Gangjin Haenam C/S Yeosu N/P Jeju T/P Sanji Jocheon Hanrim CC Dong-Jeju Sungsan AndukSin-Jeju Hanla Namjeju Seogwipo

In-Masan Bukbusan Kori N/P Sin-Yangsan Sin-Gimhae Sin-Gosung Nam-Pusan Pusan C/C Samcheonpo T/P Hadong T/P

Copyright 2011 by KPX co., Ltd. All rights reserved.

Isolated power grid within Korean peninsular. High growth rates of power consumption. - Annual increase rates; 91-95: 10.9%, 96-00: 7.4%, 01-05: 6.6%, 06-10: 5.6% Highly dependent on foreign energy resources; - 96.4% of primary energy imported (232 million toe, 08) * Primary energy resources; - Oil: 43.1%, Coal: 27.6%, LNG: 15.3%, Nuclear: 2011 IRAN IGMC Power System Operation Training Program 14.0%
Wolseong N/P Ulsan TP, C/C Sin-Onsan

(Unit : 10 MW)
Sin-Incheon Ilsan Paldnag

Hwachun Chuncheon 100 Euiam

Yangyang

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Kangreung Youngdong

5 12 Chungpyung 90 Seo-Incheon 180 20 Soyangkang Pucheon Seoul 8 Incheon 39 7 40 POSCO 180 45 Chungpyung Small Hydro (Pocheon etc) Youngheung 247 115 50 45 90 180
Dangjin Taean

Capacity by Fuels
Donghae

33

40

(Unit : MW)

Nuclear
590
Uljin

400 48 140
Pyungtaek

Bundang Anyang LGBugok

17,716(23.3%) Oil 5,805(7.6%) Hydro 5,524(7.3%) Renewable 1,762(2.3%) Coal 24,800 (32.6%) * As of Dec 31, 2010 LNG 20,471 (26.9%)

400

50

Boryeong

300 180 40
Seocheon

41 9 Chungju Daechung 60
Muju Hapchun Andong

Wolseong

2
Yongdam

9 10 70

Imha Cheongsong

60
Ulsan

278 40
Youngnam

3 2
Youngkwang

Sumjinkang Sanchung

60 Samrangjin
Busan Samcheonpo

180 120

Kori

590

Chuam

Hadong Yulchon 53 Honam Kwangyang Yeosu

314

400

50

99

300

180

53

74

Jeju

Copyright 2011 by KPX co., Ltd. All rights reserved.

2011 IRAN IGMC Power System Operation Training Program

Characteristics 765kV
Mass transmission system

Yangyang P/P Sin-Dukheun Seo-Incheon C/C Yangju Sin-Gapyung Uijeongbu

345kV
Main transmission system

Migum Sungdong Chungbu Seo-Incheon Youngdeungpo Sin-Yangje Dong-Seoul Youngseo Incheon T/P, C/C Sin-Bupyung Sin-Sungnam Sin-Incheon Gonjiam Seo-seoul Sin-Sihung Youngheung T/P Hwasung Sin-Youngin Sin-Ansan Pyungtaek T/P, C/C Dangjin T/P Taean T/P Sin-Dangjin Ansan Sin-Jincheon Sin-suwon Sin-Ansung Sin-Jecheon Sin-Youngju

Donghae

Sin-Taebaek

Uljin N/P

Cheongsong P/P Chungwon

154kV
Distribution system - Connected to major areas of consumption

Sin-seosan Boryeong T/P, C/C

Sin-onyang Sinkaedong Chungyang Gunsan Muju P/P Sin-Gimje Sancheong P/P Sin-Okcheon

Sin-Youngil

Sunsan Buk-Daegu Seo-Daegu Goryeong Sin-Kyeongsan Daegu Sin-Namwon Youngwang N/P Euiryong In-Masan Sin-Gwangju Sin-Gimhae Sin-Gosung Sin-Hwasun Gwangyang Sin-Gangjin Haenam C/S Yeosu N/P Hadong T/P Pusan C/C Samcheonpo T/P Pusan C/C Hadong T/P Samcheonpo T/P Bukbusan Ulju Ulsan TP, C/C Wolseong N/P

Sin-Ulsan Sin-Onsan Kori N/P Sin-Yangsan

Direct Current Line - Connect the main land to Jeju Island

Nam-Pusan

Gwangyang Steel Gwangyang Steel

(Unit: C-km/ Numbers of S/S)

Second HVDC Line between main land and Jeju island is being built by 2012 ( 300MW 700MW)
Copyright 2011 by KPX co., Ltd. All rights reserved.

Jeju T/P Sanji Jocheon

Hanrim CC Anduk Namjeju

Dong-Jeju Sungsan Sin-Jeju Seogwipo Hanla

765kV : 755 / 6 345kV : 8,552 / 88 154kV : 20,700 / 628


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2011 IRAN IGMC Power System Operation Training Program

A peak demand of 71GW occurred on Dec 15, 2010


6.8% increase compared to the last years peak. Higher than expected due to the extended cold waves.

The capacity margin was just around 6.2% (the lowest since 2001)
Has gradually decreased due to the delayed construction in facilities. May improve from 2012 with the generator additions.
(Unit:MW) * As of Dec , 2010

Peak demand
(Growth rate)

70,000 65,000 60,000 55,000 50,000 45,000 04


Copyright 2011 by KPX co., Ltd. All rights reserved.

66,800 (6.4%)

71,308 (6.8%)

Reserve margin
12.2% 11.3%

51,260 (8.2%)

54,630 (6.6%)

58,990 (8.0%)
10.5%

62,290 (5.6%)

62,790 (0.8%)

9.1% 7.2%

7.9% 6.2%

05

06

07

08

09

10
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2011 IRAN IGMC Power System Operation Training Program

Power Planning

Power Market

Power System

II Electricity Market
Key Features Market Operations - Procedures - Biddings - Load Forecasting - Generation Scheduling - Metering - Settlement

Copyright 2011 by KPX co., Ltd. All rights reserved.

Mandatory Pool
All generators( 1 MW) and retailers should trade(buy and sell) electric power through the market ; All market participants should register as the KPX member. The market players are GENCOs(sellers) and KEPCO(the single buyer).

Generator Bidding Pool


Only the supply(generation) side bid into the pool with their generator availabilities for each trading day. The buyer does not bid and the purchaser, KEPCO, acts as a price taker in the market. KPX forecasts the hourly electricity demand for the trading day. The market clearing is processed hourly base, prices and volumes are fixed day-ahead for 24 hours of the following day.

Copyright 2011 by KPX co., Ltd. All rights reserved.

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Cost Based Pool (CBP)


The cost (not the price) of each generator is bid into the pool.
The generation cost is determined monthly by the Generation Cost Evaluation Committee(GCEC) based on the fuel prices in the previous month. As mentioned before the generators bid only their availability.

The System Marginal Price(SMP) is determined in the process of Price Setting Scheduling.
SMP reflects actual production costs of generators(start-up, no-load, incremental cost).

The Capacity Payment(CP) is paid by for the availability declared(MW).


CP is paid to all generators(the Centrally Dispatching Units( 20 MW)) who submit offer data, whether or not dispatched. CP is determined at every year, and it is adjusted considering the level of reserve margin which can be the signal of investments. CON/COFF Payment are payed for the differences between the scheduled and the actual generations.

Copyright 2011 by KPX co., Ltd. All rights reserved.

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Marginal Loss Factor(MLF) for the transmission loss introduced( 07).


- To minimize the long-term social cost by the incentives to generation investment in heavy load center (Generation+Transmission). - To operate optimally the resources in the short-term by considering the locational value of generations. The transmission losses are considered. - MLFs are applied to generator nodes. Application to the load nodes is not necessary because the KEPCO is the single buyer. - As the stranded costs were incurred, a relaxation factor was introduced to prevent the abrupt change of generator revenues(10% increase in each year). Change of generation at the reference bus
------------------------------------------------------Change of load Definition of MLFat a specific bus 1 + Loss / Load increment =

MLF =

where, Loss ; change of total loss in the network Load increment ; incremental load at a certain bus
Copyright 2011 by KPX co., Ltd. All rights reserved. 2011 IRAN IGMC Power System Operation Training Program

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Types of of Ancillary Services


1) Frequency Control ; GF/AGC 2) Generation Reserves ; Operational reserves provided by fast start generators. 3) Black Starts ; 1 or 2 Self start-up generators per region. 4) Voltage Regulation Service ; Obligation of reactive power supply.

Ancillary Services Payments


Compensation for ancillary services is paid according to their contributions, i.e. GF/AGC service performances are assessd by the performance index. Co-optimization between energy and ancillary is possible. The economic dispatch principle (merit order) is fully met, i.e. the roles of each types of the generator is fulfilled according to their functions. i.e. the Base load(Coal) : Max. energy output. the Peaker(LNG): Effective load following by providing AGC service.
Copyright 2011 by KPX co., Ltd. All rights reserved. 2011 IRAN IGMC Power System Operation Training Program

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The reference capacity payment(RCP) is adjusted according to the forecasted capacity margin by regions (metropolitan/other/Jeju island) when it is beyond a reasonable value, i.e.12 %. The seasonal/hourly coefficients are applied to RCP to ensure the sufficient generation capacity in peak times. All the offered capabilities of the centrally dispatched generators(over 20 MW) are compensated by hourly based RCP regardless of their actual operations.

Copyright 2011 by KPX co., Ltd. All rights reserved.

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Copyright 2011 by KPX co., Ltd. All rights reserved.

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Daily Bidding
Contents Hourly availability. Technical characteristics. Bidding time Closing time : AM 10:00, trading-day ahead(D-1) Term : 34 hours (19:00 D-1 ~ 04:00 D+1) Default Data is used if generators dont submit their data due to communication failures or human errors.

Re-Offers
Starting Time: 10:01 AM before the trading day. Closure Time: l (one) hour before the trading hour. Re-offer is allowed only when the generator has faults and it cannot meet the declared availability.
Copyright 2011 by KPX co., Ltd. All rights reserved. 2011 IRAN IGMC Power System Operation Training Program

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A Day-ahead Market ( D-1 )


SMP Disclosure System Operation Schedule Disclosure

Real-time Dispatch (D-0)

Trading hour 5 a.m 10a.m 16p.m 19p.m 20p.m

15p.m

18p.m

Daily bid& offer made by standing bid procedure

Daily bid Submission Gate Closure

Pumping bid Gate Closure

Bid change Closure 1 hour before trading hour, faults, outages

Copyright 2011 by KPX co., Ltd. All rights reserved.

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Generation Cost [Won/kWh] = Heat rate [kcal/kWh] Fuel cost [Won/kcal] - Gencos submit monthly the fuel cost data to the Committee. - Fuel consumption rates are measured at 25%, 50%, 75%, 100% of the gen. output level during the performance test.

Cost curve ; Determine the efficiency coefficients(a,b,c)


C ($/hour) i C ($/hour) i
No-load Cost

P(MW) Cost(Ci) = {(aP2 + bP + c)} x Fuel Cost $/hour Gcal/hour $/Gcal

Copyright 2011 by KPX co., Ltd. All rights reserved.

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Forecasting tool
Load forecasting system (LOFY*)

Application
For the fairness and transparency of the market pricing, the output of LOFY is used without any adjustments or modifications. However, for the operational generation schedule, specific knowledge /experiences/judgement of the engineer who is in charge, is added.

Using database
Weather forecasting data (Korea Meteorological Administration) Historical load data (using similar day pattern data)
LOFY was developed by the KEPRI(Korea Electric Power Research Institute) and updated their historical data base every year.

Copyright 2011 by KPX co., Ltd. All rights reserved.

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RSC( Resource Scheduling and Commitment) determines the generator start/stop operations and also the generation outputs which can minimize the total generation cost while balancing supply and demand.

Generation Scheduling Program


Delivered by : ALSTOM-ESCA (now ALSTOM-Grid), 1999
in 2010, changed into New RSC with MIP(Mixed Integer Program) solution

Major Functions
Market-based scheduling and day-ahead dispatch scheduling. The price setting is made by the unconstrained schedule and the generator dispatch planning by the constrained schedule.

Copyright 2011 by KPX co., Ltd. All rights reserved.

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Price Setting Scheduling


The cost data, bidding data and forecasted load data are input for generation scheduling. Least cost generation scheduling reflects only the technical characteristics of generators. When the scheduling is finished, the hourly SMPs are published at 3:00 PM.

System Operational Scheduling


The forecasted load data can be adjusted for the system operational scheduling. All the system constraints, such as the reserve margin, transmission limits, fuel restrictions, co-generation for district heat supply, are reflected in the scheduling. The scheduling result(starts/stops, dispatch targets) are notified to Gencos before 6:00 PM to prepare their operations.

Copyright 2011 by KPX co., Ltd. All rights reserved.

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Price Setting Schedule Features Input Data


To produce the hourly SMP in the market. Hourly forecasted load (34 hrs) Generation cost curve Generator availability Technical characteristics of the generating units

System Operational Schedule


To produce the actual operational schedule in consideration of various constraints of the power system. Hourly forecasted load (24 hrs) Generation cost curve Generator availability Technical characteristics of the generating units Transmission constraints Reserve constraints Heat supply and fuel constraints Hydro and pump storage constraints

Objective Function

Total Generation Cost Minimization Published at 18:00 (D 1)

Disclosure Published at 15:00 (D 1) Time

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SMP (Won/kWh) Gen 15 (200W) Gen 14 (150W) Gen 13 (82W) Gen 12 (81W) Gen 11 (80W) Gen 10 (44W) Gen 9 (43W) Gen 8 (42W) Gen 7 (41W) Gen 6 (40W) Gen 5 (3.4W) Gen 4 (3.3W) Gen 3 (3.2W) Gen 2 (3.1W) Gen 1 (3.0W) <Total Cap> Nuclear Coal biding LNG Gen 15 (200 ) Gen 13 (82 ) Gen 12 (81 ) Gen 11 (80 ) Gen 9 (43 ) Gen 8 (42 ) Gen 7 (41 ) Gen 6 (40 ) Gen 5 (3.4 ) Gen 4 (3.3 ) Gen 3 (3.2 ) Gen 2 (3.1 ) Gen 1 (3.0 ) <Biding Cap>
Copyright 2011 by KPX co., Ltd. All rights reserved. 2011 IRAN IGMC Power System Operation Training Program

CP based on Marginal plant


New addition(G/T)

Etc

Gen 15 (200 ) Gen 13 (82 ) Gen 12 (81 ) Pricing Gen 11 (80 ) Gen 9 (43 ) Gen 8 (42 ) Gen 7 (41 ) Gen 6 (40 ) Gen 5 (3.4 ) Gen 4 (3.3 ) Gen 3 (3.2 ) Gen 2 (3.1 ) Gen 1 (3.0 ) 4h

Gen 15 (200 ) Gen 13 (82 ) Gen 12 (81 ) Gen 11 (80 ) Gen 9 (43 ) Gen 8 (42 ) Gen 7 (41 ) Gen 6 (40 ) Gen 5 (3.4 ) Gen 4 (3.3 ) Gen 3 (3.2 ) Gen 2 (3.1 ) Gen 1 (3.0 ) 15h

Forecasted Forecast Load ed

Load

SMP Based on Marginal cost

hour

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How do we set the market price (SMP) ?(2)

(Unit:10MW)

Available supply capacity High Market price


(Unit : Won/kWh)

Power demand

Low
(Time) 01:00 Power demand(10MW) Market price(won/kWh) 3,730 70.41 04:00 3,320 32.67 09:00 4,770 131.89 24 12:00 5,500 142.21 15:00 5,690 142.21 19:00 5,420 138.4 21:00 5,420 142.21 24:00 4,740 118.65

All kinds of constraints should be considered in the real time


All the data should be updated, based on the initial operational schedule, such as the load forecasts, generator availability changes(Re-Offers), heat supply and fuel constraints, and hydro and pump storage operations, etc. SCADA data is very important at this stages for the system stability analysis. Schedule energy (generation and dispatch-able load), regulation and operating reserves every 5 minutes to : minimize cost balance load meet regulation and reserve requirements satisfy transmission constraints satisfy generator/load constraints.
Copyright 2011 by KPX co., Ltd. All rights reserved. 2011 IRAN IGMC Power System Operation Training Program

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Optimal dispatch by inter-connection MOS with EMS


5-min optimal constrained dispatch using MOS(ABB). Ancillary serve requirements is met by the MOS-EMS coupling. AGC base points are given by MOS and economic participation factors as well. Coupled operation between the AGC operation scheme of the existing EMS and the MOS economic dispatch algorithms. * Requirements of MOS-EMS Coupling Transform the CBP cost data into the MOS bidding data(10 prices and outputs); The bidding data transformation server does this. Accuracies of the Load Forecast/State Estimation are possible by the reliable SCADA /RTU performance and the network modeling techniques. The on-line monitoring of MOS operation is required.
Copyright 2011 by KPX co., Ltd. All rights reserved. 2011 IRAN IGMC Power System Operation Training Program

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Load Forecast Cost Based Bid Curve

Day-ahead Market
Real Time System Operation

Price(SMP) Schedule -

Settlements Energy
Scheduled Metered

Generation

Capacity Bid A / S Bid

Capacity Prices

Capacity A/S

A/S Prices

Copyright 2011 by KPX co., Ltd. All rights reserved.

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IPPs : SMP is paid for trading volumes


Giving incentives for independent power producers and inducing the invests for the base load generations.

KEPCO Subsidiary Gencos ; *RRC is applied instead of the full SMP.


Can not give all the settlement revenues due to KEPCO revenue shortfalls. Financial balancing among six power generation subsidiaries.
*RRC : Regulated revenue coefficients are different according to the generator types.

Classification IPPS KEPCO Subsidiary (by generator types)


Copyright 2011 by KPX co., Ltd. All rights reserved.

Variable Cost SMP Variable cost+ {(SMP-VC)RRC}


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(Won/kW-hour)

Fixed Cost 7.46

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Power Planning

Power Market

Power System

Recent Market Results


Trends of Electricity Trading Market Prices & Retail Tariffs Summary of the Market Experiences

Copyright 2011 by KPX co., Ltd. All rights reserved.

Number of participants has increased due to the growth of the renewables, especially, the solar power (104 members in 07 422 members in 10) Despite global economic recession, trade volume is increasing steadily.
Trade volume is 441TWh (Average increase rate for the last 4 years 5 %) Trade payments is $28 Billion (Average increase rate for the last 4 years: 14 %) * 6 Gencos, KEPCOs subsidiaries, take 91.7% of the total trade volume in 2010. Number of Members
(Unit : No.)

Trade Volumes
(Unit : TWh)

Trade Payments
(Unit : Billion Dollar)

302 104

422

392 374

441

23 18

28

07 08 10

07 08 10

07 08

10

* As of December, 2010
Copyright 2011 by KPX co., Ltd. All rights reserved. 2011 IRAN IGMC Power System Operation Training Program

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Market/Purchasing Prices
Steadily rising since the establishment of the market. The market price jumped in 2008 due to high increase of fuel prices. Market prices were maintained at high levels, however, the average settlement prices kept at a marginally increased level thanks to the nuclear power. < Retail tariffs by the usages >

($/MWh)

< Market Price/Purchasing Price >

Retail prices
Stable even with the high fuel prices. This is because retail tariffs are regulated by the government, and KEPCOs financial status are not good in recent years due to the high purchasing price Cross subsidy between the tariffs according to the usages make it difficult to progress the market evolutions.
Copyright 2011 by KPX co., Ltd. All rights reserved. 2011 IRAN IGMC Power System Operation Training Program

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Electricity market reduces the electricity production cost and maximizes the resource availability
Economic dispatch is possible based on generation cost. Increasing the efficiency of O&M works of the generating facility. Improving the rate of using low-cost facility(nuclear, coal) (Capacity factor of nuclear and coal power plants are increased after operation of CBP market as 3.39%p and 2.7%p respectively.)

Accomplish the efficiency of investment


The substitution effect of new generation because the maximum capacity of

generators were increased and maintenance schedules were shortened. - About 1,000MW substitution effect of new base load generator were occurred after the market opening. O/M cost were cut down owing to the competition.

Copyright 2011 by KPX co., Ltd. All rights reserved.

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Power Planning

Power Market

Power System

Market Issues
Vesting Contract Cross Subsidy between Customers Demand Response

Copyright 2011 by KPX co., Ltd. All rights reserved.

Vesting Contract between Gencos and KEPCO has been suggested for the existing generators which were commissioned before the market opening(Because their construction cost has been already recovered and should be paid less compared the new generations). Cross subsidized tariffs between the electricity users results in inefficient use of the electricity in the beneficiaries. It seems that some users waste the electricity at heating because of low electricity prices compared with other form of energy. Demand response mechanism in the market will contribute to the optimal use of the electricity in generals. By using the market price(if possible, the real-time price) as the economic signal, smart grid initiatives will have a bright future in the industry.
Copyright 2011 by KPX co., Ltd. All rights reserved. 2011 IRAN IGMC Power System Operation Training Program

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Power Planning

Power Market

Power System

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