Optimal Transmission Switching: When Economic Efficiency and FTR Markets Collide, S Oren, K HEDMAN, R O'NEIL

Tags: valid inequalities, electric networks, S. S. Oren, E. B. Fisher, R. P. O'Neill, K. W. Hedman, Conference Publications
Content: Optimal Transmission Switching: When Economic Efficiency and FTR Markets Collide Shmuel Oren1, Kory Hedman1, and Richard O'Neill2 1 University of California, Berkeley 2 Federal Energy Regulatory Commission Economics of Energy Markets Conference Toulouse, France ­ January 28-29, 2010 1
Overview Motivation for transmission switching Economic efficiency through topology improvements with no reliability degradation Smart grid application by exploiting short term network reconfiguration flexibility Analyze market implications of optimal transmission switching May undermine prevailing market mechanisms ­ cause revenue inadequacy in the FTR market Unpredictable distributional impacts on LMPs, generation rent, congestion rent, etc. 2
Overview of Optimal Transmission Switching Concept Control of transmission not fully utilized today Transmission assets are seen as static in the short term Currently operators change transmission assets' states on ad-hoc basis (per private communication with Andy Ott, VP, PJM) Network redundancies Required for reliability, not required for every market realization Redundancies may cause dispatch inefficiency Optimal transmission switching: co-optimize network topology with generation dispatch 3
Transmission Switching Example Original optimal cost: $20,000 (A=180MW,B=30MW,C=40MW) at {2} Original feasible set: {0,1,2,3} Open Line A-B, optimal cost: $15,000 (A=200MW, B=50MW) at {8} Feasible set with Line A-B open {0, 4, 5, 6} Feasible set with optimal transmission switching: {0, 1, 7, 5, 6} (non-convex) 4
literature review Corrective switching [Mazi, Wollenberg, Hesse 1986]: Corrective control of power systems flows [Schnyder, Glavitsch 1990]: Security enhancement using an optimal switching power flow [Glavitsch 1993]: Power system security enhanced by post-contingency switching and rescheduling [Shao, Vittal 2006]: Corrective switching algorithm for relieving overloads and voltage violations Switching to reduce losses [Bacher, Glavitsch 1988]: Loss reduction by network switching [Fliscounakis, Zaoui, et al. 2007]: Topology influence on loss reduction as a mixed integer linear program Switching to relieve congestion [Granelli, Montagna, et al. 2006]: Optimal network reconfiguration for congestion management by deterministic and genetic algorithms 5
Traditional DCOPF
Minimize: Total generation cost Subject to: Generator min & max operating constraints Node balance constraints Line flow constraints Bk (n -m ) - Pk = 0 Line capacity constraint
Variables: Pk: real power flow from bus m to bus n for line k Pg: Gen g supply at bus n n: Bus n voltage angle zk: Transmission line status (1 closed/in service, 0 open/out of service) Parameters: Bk: Susceptance of line k dn: Real power load at bus n
6
Incorporating Transmission Switching into DCOPF
zk: State of transmission line (Binary: 0 open/offline, 1 closed/operational)
Update line thermal (capacity) constraints:
Original:
P min k

Pk

P max k
New:
P min k
zk
Pk

P max k
zk
Update line flow constraints: Original: Bk (n - m ) - Pk = 0
New: Bk (n -m ) - Pk + (1- zk )M k 0
Bk (n -m ) - Pk - (1- zk )M k 0
7
Optimal Transmission Switching DCOPF 8
Economic Savings for DCOPF and N-1 DCOPF Models DCOPF Transmission Switching Model (one hour): IEEE 118 Bus Model: saves 25% saving (10 lines off) ISONE 5000 Bus Model: 5%-13% savings ($70,000 savings) With advanced smart Grid technology, switch lines back into service for a contingency to meet N-1 (just-in-time transmission) N-1 DCOPF Transmission Switching Model (one hour): IEEE 73-Bus Model: up to 8% savings IEEE 118-Bus Model: up to 16% savings Ensures N-1 within transmission switching model Improves efficiency of grid while ensuring N-1 Reliability9
Results ­ DCOPF ­ IEEE 118 Transmission switching solution saves 25% of total generation cost J 10
Results ­ DCOPF ­ IEEE 118 IEEE 118 opened lines for J=10 Note: this diagram has additional gens than our model
Economic Savings for UC with Transmission Switching Generation Unit Commitment N-1 DCOPF Transmission Switching Model: IEEE 73-Bus Model: 3.7% savings ($120,000 savings for 24-hour model) Unit commitment solution changes when topology changes Peaker units committed with original topology - not committed under co-optimization of network topology and unit commitment Optimal topology varies hour to hour 12
Impact on market participants
Results are % of static network's DCOPF solution Unpredictable distributional effects for market participants
200% 180% 160% 140%
Generation Cost Generation Revenue Generation Rent Congestion Rent Load Payment
120%
100%
80%
60%
40%
J=0 J=1 J=2 J=3 J=4 J=5 J=6 J=7 J=8 J=9 J=10 Case Case Best 12
13
Impact on LMPs
Max and min percent change in LMP IEEE 118 bus test case ­ DCOPF optimal transmission switching problem
200%
100%
0%
-100%
-200%
-300%
Average % Change in LMP Max % Change in LMP
Min % Change in LMP
-400%
J=1 J=2 J=3 J=4 J=5 J=6 J=7 J=8 J=9 J=10 Case Case Best
14
12
Overview of
Financial Transmission Rights
FTRs are used to hedge price risk
FTR settlements are financed by congestion rents
Revenue inadequacy occurs when ISO does not collect enough
congestion rent to fulfill its obligation to FTR holders
ISO may then allocate shortfall to participants or carry it forward and try to recover it from surplus at other times
Revenue adequacy of FTRs is guaranteed for the static DC
topology (since the simultaneous FTR feasible solution corresponds to a suboptimal feasible power flow)
Revenue adequacy is not guaranteed if the network topology changes
Optimal transmission switching undermines the assumption of a
static topology
15
3-Bus FTR Revenue Adequacy Example 16
Revenue Inadequacy due to Transmission Switching 17
Revenue Inadequacy due to Transmission Switching
FTR allocation is revenue adequate for initial
topology but revenue inadequate for optimal
network topology with both A-B lines open
A-B
Original
3
Optimal
Dispatch
50
Optimal Dispatch with Both A-B Lines Open FTR Allocation 2AB + AC 150
AB 0 AC 0
1 2 50 AB + AC 100
A-C 18
Transmission Switching Can Help Regain Revenue Adequacy 19
Transmission Switching Can Help
Regain Revenue Adequacy
Line outage causes revenue inadequacy (loss of A-B 1)
Further grid modifications may regain revenue adequacy and
improve market surplus (open line A-B 2)
Original Optimal Dispatch Optimal 50 Dispatch with Line A-B 1 Open AB 0 AC 0
A-B Optimal Dispatch
with Both A-B
3
Lines Open
FTR Allocation
1
2AB + AC 150
4
2
50 AB + AC 100
A-C 20 2AB + AC 100
Policy Implications Optimal transmission switching improves social welfare Yet market participants may object since it can cause revenue inadequacy, affects LMPs, generation rents, congestion rents, etc. How to deal with revenue inadequacy? Implement side payments and who pays? De-rate FTR payments? Emerging "smart grid" technologies may make certain market mechanisms obsolete Rethink market design principles? How would optimal transmission switching affect FTR auctions? 21
Summary FTRs are important as they are used to hedge price risk Revenue adequacy of FTRs is vulnerable to grid topology changes Co-optimizing generation and network topology improves market surplus even while maintaining reliability criteria Unfortunately, it undermines prevailing market mechanisms Can cause revenue inadequacy in FTR markets It has unpredictable distributional effects on market participants 22
QUESTIONS? Thank you! http://www.ieor.berkeley.edu/~oren/index.htm
Publications Journal Papers: [1] K. W. Hedman, R. P. O'Neill, E. B. Fisher, and S. S. Oren, "Optimal transmission switching ­ Sensitivity Analysis and extensions," IEEE Trans. Power Syst., vol. 23, no. 3, pp. 1469-1479, Aug. 2008. [2] K. W. Hedman, R. P. O'Neill, E. B. Fisher, and S. S. Oren, "Optimal transmission switching with contingency analysis," IEEE Trans. Power Syst., vol. 24, no. 3, Aug. 2009. [3] K. W. Hedman, M. C. Ferris, R. P. O'Neill, E. B. Fisher, and S. S. Oren, "Co-optimization of generation unit commitment and transmission switching with N-1 reliability," IEEE Trans. Power Syst., accepted for publication. [4] R. P. O'Neill, K. W. Hedman, E. A. Krall, A. Papavasiliou, M. C. Ferris, E. B. Fisher, and S. S. Oren, "Economic analysis of the N-1 reliable unit commitment and transmission switching problem using duality concepts," energy systems, accepted for publication. 24
Publications cont'd Under Review: [5] K. W. Hedman, R. P. O'Neill, E. B. Fisher, and S. S. Oren, "Smart flexible just-in-time transmission and flowgate bidding," IEEE Trans. Power Syst., Submitted June 1, 2009; Revised November 15, 2009. Peer-Reviewed Conference Publications: [6] K. W. Hedman, R. P. O'Neill, and S. S. Oren, "Analyzing valid inequalities of the generation unit commitment problem," in Proc. Power Syst. Conf. and Expo., March 2009. [7] E. B. Fisher, K. W. Hedman, R. P. O'Neill, M. C. Ferris, and S. S. Oren, "Optimal transmission switching in electric networks for improved economic operations," in INFRADAY Conference 2008. 25

S Oren, K HEDMAN, R O'NEIL

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Author: S Oren, K HEDMAN, R O'NEIL
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