Electricity markets and power system economics

Title:

Personal Author:

Gan, Deqiang, 1966- author

Publication Information:

Boca Raton, FL : CRC Press, 2014

Physical Description:

x, 210 pages : illustrations ; 24 cm.

ISBN:

9781466501690

Abstract:

"With the theories and rules of electricity markets developing rapidly, it's difficult for beginners to start learning and difficult for those in the field to keep up. Bringing together information previously scattered among various journals and scholarly articles, this book provides a comprehensive overview of the current state of development in the electricity market. It introduces the fundamental principles of power system operation so that even those with a basic understanding can benefit from the book. It includes a series of consistent mathematical models of market operation of power systems, original cases, and MATLAB programming examples with solutions"--provided by publisher

Subject Term:

Electric utilities

Power resources -- Finance -- Mathematical models

Added Author:

Feng, Donghan, 1966-

Xie, Jun,

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Summary

After the first power plant in history was commissioned for commercial operation by Thomas Edison on Pearl Street in New York in 1882, electricity was sold as a consumer product at market prices. After a period of rapid development, electricity had become such a fundamental product that regulation was believed to be necessary. Since then, the power industry had been considered a natural monopoly and undergone periods of tight regulation. Deregulation started in the early 1980s and as a result, most developed countries run their power industries using a market approach.

With the theories and rules of electricity markets developing rapidly, it is often difficult for beginners to start learning and difficult for those in the field to keep up. Bringing together information previously scattered among various journals and scholarly articles, Electricity Markets and Power System Economics provides a comprehensive overview of the current state of development in the electricity market. It introduces the fundamental principles of power system operation so that even those with a basic understanding can benefit from the book. 　

The book includes a series of consistent mathematical models of market operation of power systems, and original cases with solutions. Systematically describing the basic building blocks of electricity market theory, the book provides a guide to underlying theory and mainstream market rules.

Author Notes

Deqiang Gan has been with the faculty of Zhejiang University since 2002. He visited the University of Hong Kong in 2004, 2005, and 2006. Deqiang worked for ISO New England, Inc. from 1998 to 2002. He held research positions in Ibaraki University, University of Central Florida, and Cornell University from 1994 to 1998. Deqiang received his Ph.D. in Electrical Engineering from Xian Jiaotong University, China, in 1994. He currently serves as an editor of European Transactions on Electric Power. His research interests are power system stability and market operations. Deqiang is a senior member of the IEEE.

Preface	p. ix
1 Introduction	p. 1
1.1 Demand and Supply	p. 1
1.2 Market Equilibrium	p. 2
1.3 Price Elasticity and Competitive Markets	p. 4
1.4 Economy of Scale and Natural Monopoly	p. 7
1.5 Brief History of Electricity Markets	p. 8
References	p. 9
2 Fundamentals of Power System Operation	p. 11
2.1 Economic Dispatch	p. 11
2.2 Load Flow Calculation	p. 13
2.3 Load Flow under Outages	p. 21
2.4 Fundamentals of Constrained Optimization	p. 22
2.5 Security-Constrained Economic Dispatch	p. 28
2.6 Load Frequency Control	p. 33
2.7 Spinning Reserve	p. 37
2.8 Generation Scheduling	p. 38
2.9 Calculation of Transfer Capabilities of Transmission Interfaces	p. 41
2.9.1 Description of Min-Max Transfer Capability Problems	p. 41
2.9.2 Optimality Condition and Algorithm	p. 45
2.9.3 Bi-Sectioning Search Algorithm	p. 46
2.9.4 Difference between Min-Max and Maximum Transfer Capability	p. 48
2.9.5 Conditional Min-Max Transfer Capabilities	p. 49
2.9.6 Results of Search Algorithm	p. 50
2.10 Overview of Power System Operation	p. 51
Appendix 2A Determining Requirements of Ancillary Services	p. 52
Appendix 2B Constraint Regularity Conditions for Non-Linear Programming	p. 57
References	p. 59
Bibliography	p. 59
3 Market Design: Spot Energy Market	p. 61
3.1 Organization after Deregulation	p. 62
3.2 Uniform Pricing	p. 63
3.2.1 Model for Uniform Pricing	p. 64
3.2.2 Bilateral Trading in Pool-Based Electricity Markets	p. 69
3.3 Nodal Pricing	p. 70
3.3.1 Model for Nodal Pricing	p. 70
3.3.2 Selection of a Reference Node	p. 74
3.3.3 Sparse Form of Nodal Pricing	p. 76
3.4 Multiple Block Bidding	p. 77
3.5 Demand Side Bidding	p. 78
3.6 Day-Ahead Market	p. 79
3.6.1 Basic Principles	p. 79
3.6.2 Multi-Settlement System	p. 82
3.7 Ex Post Spot Pricing	p. 82
3.8 Transmission Losses	p. 86
3.9 Bilateral Trading in the United Kingdom	p. 91
3.9.1 Motivation	p. 91
3.9.2 Structure and Mechanism	p. 92
3.9.3 Real-Time Balancing	p. 92
3.9.4 Performance	p. 94
3.10 Electricity Market Reform in California	p. 95
References	p. 99
Bibliography	p. 99
4 Market Design: Procurement of Ancillary Services	p. 101
4.1 Reserve Market	p. 101
4.2 AGC Market	p. 105
4.3 Energy, Reserve, and AGC Co-Optimization Market	p. 108
4.4 Compensation without Competition	p. 110
Appendix 4A Australia National Electricity Market	p. 111
References	p. 112
Bibliography	p. 112
5 Market Design: Common Cost Allocations	p. 113
5.1 Background	p. 113
5.2 Transmission Costs	p. 115
5.2.1 Postage Stamp Methodology	p. 115
5.2.2 MW Mile Methodology	p. 116
5.2.3 Benefit Factors Methodology	p. 116
5.2.4 Cooperative Game Methodology	p. 117
5.3 Unit Start-Up Cost	p. 120
5.3.1 Rationality of Allocations and Cores	p. 122
5.3.2 Allocation Based on Nucleolus and Shapley Value	p. 127
5.4 Peaking Cost Compensation	p. 131
5.4.1 Peaking Values of Generators	p. 132
5.4.1.1 Operations Scheduling of NCPS	p. 132
5.4.1.2 Quantification of Peaking Values of Generators	p. 134
5.4.2 Peaking Cost Compensation: Cooperative Game-Based Mechanism	p. 135
5.4.2.1 Cooperative Game	p. 136
5.4.2.2 Properties of the Peaking Cost Compensation Game	p. 137
5.4.2.3 Methods for Reducing Computational Effort in Shapley Value Computation	p. 140
5.4.3 Peaking Cost Compensation: Engineering-Based Mechanism	p. 141
5.4.3.1 Indices for Measuring Peaking Capabilities of Generators	p. 142
5.4.3.2 Peaking Cost Compensation	p. 143
5.4.3.3 Simulation Results	p. 143
5.5 Transmission Rights	p. 146
Appendix 5A Proofs	p. 153
Appendix 5B Empirical Data for Start-Up Costs	p. 155
Appendix 5C Standard Market Design in the U.S	p. 156
References	p. 157
Bibliography	p. 157
6 Microeconomic Analysis	p. 159
6.1 Background	p. 159
6.2 Fundamentals of Non-Cooperative Game Theory	p. 160
6.3 Game Models for Market Analysis	p. 166
6.3.1 System Dispatch Model	p. 167
6.3.2 Game Model	p. 168
6.3.3 Equilibrium Analysis	p. 169
6.4 Market Power Analysis	p. 174
6.4.1 Market Power Measurement Indices	p. 174
6.4.2 Market Power Analysis	p. 175
6.5 Electricity Market Experiments	p. 175
Appendix 6A Fixed Point Theory and the Existence of Market Equilibrium	p. 176
References	p. 177
Bibliography	p. 177
7 Price Forecast and Risk Management	p. 179
7.1 Forecasting Electricity Prices	p. 179
7.1.1 Shore-Term Price Forecasting	p. 180
7.1.2 Mid- and Long-Term Forecasting Using Linear Regression	p. 183
7.2 Managing Price Risk through Trading Portfolio Optimization	p. 185
7.2.1 A Simulation-Based Method	p. 186
7.2.2 Application and Comparison	p. 191
References	p. 200
Bibliography	p. 200
Index	p. 201

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Author Notes

Table of Contents