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Proceedhpofthe6thInternationalConferenceunAdvancesinPowerSystemControl,Operationandhlanngemenr,APSCOhi2003,HongKong,November2003.
ADECENTRALIZEDAPPROACHFOROPERATINGRESERVEPROCUREMENTChiYiuCHANKenT.
K.
CHANYixinNIFelixF.
WUchiychan@eee.
hku.
hk110000622@eee.
hku.
hkyxni@eee.
hku.
hkffwu@eee.
hku.
hkDept.
ofElectricalandElectronicEngineering,TheUniversityofHongKongABSTRACTInpowermarkets,operatingreserveprocurementisusuallycentrallyhandledaccordingtocertainreliabilityrulesandaimingatminimizationoftotalcostforreserveprocurement.
Inthisapproach,therearenocustomers'choices,noincentivesforIS0tominimizethetotalcostorforreservesupplierstocommitpromisedreservecapacity.
Itmayleadstosevereinefficiency.
Inthispaper,weproposeadecentralizedapproachforoperatingreserveprocurementandinthemeantime,todiscoverthemarketpriceforit.
Intheapproach,eachparticipantselectstheoptimaldecisiontomaximizehisorherowninterests.
Insurancetheoryisapplied;whichallowsconsumerstotransfertheirriskforfinanciallossofoutagetotheISO,andinducesincentivefortheIS0tomanagetheentireamountofreservecapacityinanefficientmanner.
Apenaltysystemisintroduced,whichimprovestheliabilityforthegencotoprovideoperatingreserve.
Detailedmathmodelandsolutionprocedurearepresented.
Itisalsoshownthatwithproperlydefinedreservemarket'sstructure,thedecentralizedapproachcanyieldsameoptimalsolutionasitscentralizedcounterpart.
Numericalexampleresultsillustratetheeffectivenessofthesuggestedapproach.
1.
INTRODUCTIONOperatingreservesisanancillaryservice,whichisextragenerationavailablecapacitythatcanhegeneratedimmediatelyifrequired[I],[2].
Withtheoperatingreserve,thehulk-powersystemhasthecapabilitytoarrestthecontingency:includegenerationoutageortransmissionoutage.
Currently,anindependentsystemoperator(ISO)isintroduced,whoresponsestoensurethesecurityandreliabilityofthenetwork.
Toimprovetheefficiency,competitionbetweenreserveproviderswasintroducedinoperatingreserveprocurement[3].
TheIS0actsasasinglebuyer,withtheobjectivetominimizetheentireprocurementcost,withadefinedoperatingreserverequirement.
Thoseapproachesminimizetheconsumers'interruption.
However,itlacksconsumers'preferenceconsiderationandcannotguaranteetheefficiencyofthereserveprocurement.
Inordertomaximizethesocialwelfare.
customers'preferenceshouldbeconsidered.
Withtheeconomictheory,thebestwaytoincludecustomers'preferenceistoallowcustomers'choiceunderadecentralizeddecisionenvironment,whichcanmaximizetheeconomicefficiency.
Withtheapplicationofinsurancepolicy'41.
[61,theauthors['I.
['Iconductedaconceptualstudyondecentralizedreserveprocurementandpricing.
Theworks[7],[8]proved,withasimplecase,thatinsurancepolicycanbeusedtodesignadecentralizedmarketforreserveprocurement,whichallowsthecustomers'choice,inducesincentivesandenforcestheliabilityfortheIS0toprovidereservecapacity.
Theoptimaldecisionmaximizetheeconomicefficiency,andthepool-basedapproachiscosteffectivethanthecontract-basedapproach.
Adetailmodelofacentralizedoptimizationdecisionmaking,forderegulatedmarketenvironmentwiththeconsiderationoftheindividualwelfare,wasdevelopedtodeterminethepriceandtheoptimalquantityofoperatingreserveforindividual[9].
Itisproventhat,inordertomaximizethesocialwelfare,differentconsumersshouldhaveadifferentreserverequirement.
Inthispaper,adecentralizedoperationenvironmentwillhedevelopedforoperatingreserveprocurement.
(Hereafter,reservecapacityisreferredforoperatingreserveonly.
)Assumingthatthereisapurecompetitivemarket,eachparticipanthastheabilitytomakedecisionontheoptimalsupplyidemandquantityofthereservecapacityatthemarketreserveprice.
Microstructure,mathmodelandoptimalprocessforthedecentralizedapproachwillbepresentedinsection2,3and4respectively.
Moreover,thepaperwillbefinalizedwithadiscussionandaconclusion.
2.
DECENTRALIZEDDECISIONPARADIGMFORRESERVEMARKETAssumingthatthereareNgencos(C,,i=l-N)andMConsumers(C,,j=1-M)inthemarket,anindependentsystemoperator(ISO)coordinatesthereservecapacityprocurement.
Underadecentralizeddecisionparadigm,theIS0willnolongermakecentralizeddecision.
Itactsasaprofit-neutralcoordinatorinthereservemarket.
TheN-lsecurityassumptionisheld,i.
e.
onlyonegencoisinforced-outageatatime.
Transmissionnetworkimpactisnottakenintoaccount.
Forthestudiedtimeinterval,sayone-hour,weknowfromthespotmarketthatgencoC,supplieselectricityS,andconsumerC,consumeselectricityQ,withForthereservemarket,gencoG,providesreservecapacityRc,andconsumerC,demandsreserve613McapacityR,,thereshouldbe$RG,=xRq=R,.
liliilwhereR,,,isarrangedbasedontheloseselectricity(Qc,/Qz).
SGhandR,available,i.
e.
Thereservecapacitywillhegeneratedintheeventofoutageoccurs.
(Thegeneratedreservecapacityisreferredasreserveenergy.
)However,whenageneratorG,isinforced-outage,thecorrespondingreservecapacitywillnotheavailable,whichcausetheentireavailablereservecapacitylessthantheentiredemandofreservecapacity.
Therefore,asupplementaryreserveproviderG,isintroducedtoprovidereservecapacityandcorresponding.
reserveenergy,whichshouldoriginallyheprovidedbygencoG,.
ThesupplementaryreservecapacityR,,isdefinedasacertainpercentage(r&)oftotalreservecapacityR,,i.
e.
Rob=r,RL,andrbshouldbelargeenoughtomakeRGb=rARxtR,,foralli.
Thebasicideaofreservecapacitymarketisasfollows.
TheIS0announcesaninitialguessonreservecapacitypricesforbuyingitfromgencosatPRGandfromthesupplementaryreserveproviderPR'andsellingittoconsumersatP,'.
Accordingtotheprices,eachgencodetermineshowmuchreservecapacity(TGj)itwillsellbasedonitsfixedproductioncostandeachconsumerdeterminestheamountitwillbuy(T,)basedonitslossundersupplyinterruption.
IfITGj=1T,=Tx,themarkettaskisimplemented;ifnot,thepriceshouldhetunedproperlyuntilthebalanceissetup.
Inthispaper,"T"meanscontractedreservecapacityand"Rmeanscommittedreservecapacity.
Ifthemicrostructureofreservemarketiswelldefined,"R"shouldbeequalto"T".
Twopoliciesareintroducedforoperatingreserveprocurement,namely,insurancepolicyandpenaltypolicy.
2.
1.
InsurancepolicybetweenIS0(insurer)andconsumers(insured)ConsumersbuyreservecapacityToatreservecapacitypricePRcfromIS0andpayapremiumtotheIS0forinsurancepolicyinordertoshifttheriskforfinanciallossofoutagetotheISO.
IS0procuresreservecapacityR,(maybedifferentfromTo)forconsumerC,.
WhenanoutageoccursatyencoG,,theIS0arrangesreserveenergyR,,,toconsumerC,accordingtocertainrules(see(2))andpaysaclaimgc,,h(R,,h)(see(I))totheconsumerC,tocompensatehisfinanciallossaccordingtoinsurancepolicy.
SupposethatxM/_I,=I(R,,h)takestheformgcii(a,)=K,-[Oca>(k"+PREh-l'O.
hl.
05K,1i1)Oc,,,(&)denotestheoutagecostofconsumerC,,wholoseselectricity(Qq/QI).
SChandhavingreserveenergyRC,)whenoutageoccursatgencoG,.
fRE,hisreserveenergypriceatgencoGhoutage.
K,denotesthepercentageoftheoutagecostthatconsumerC,canclaimfromtheIS0intheeventofoutageoccurs.
Itisprovenin[7]that,rationalconsumerswilldecidetopurchaseafull-coverinsurance,i.
e.
K,,ap,=I.
WeshalltakeK,=Iinourstudy.
ExpressionforOC,,h(R,b)willhegivenlater.
2.
2.
PenaltypolicybetweengencoandIS0Withthepenaltysystem,theIS0paysgencoG,forcontractedamountofreservecapacityT,andmonitorstheactualamountofavailablereservecapacityR,.
IfanoutageoccursatC,,gencoG,willbeaskedtogeneratethereserveenergyRG)isrealoutagecostofC,atG,outagein(9)withreplacedf,,hbyk,,h.
Withfull-coverinsurance(IO),theconsumer'sexpectednetoutagecostshouldbeequaltozero.
3.
3.
IS0paysreservecapacitypaymentstothegencosandthesupplementaryreserveprovider,receivepremiumsfromconsumersandpaysclaimstotheconsumersintheeventofoutageoccurs.
Allthereserveenergypaymentsreceivedfromconsumerswillbedistributedtogencos.
IS0solvesforreservecapacityrequirementforconsumersR,,j=I-MandR,=fR,tominimizetheentirereserverelatedcost.
TheobjectivefunctioncanbeexpressedasMi~EC,(R,,RL)=P,',RI+P,'.
8.
RLMathmodelfortheIS0,.
I&.
.
RIN.
M^/=I,=,with1R,,,,=1andeqn.
(4),wecanseethattheIS0hasacost-neutralcharacteristicifhemaintainingRg,whichisequaltoT,,i.
e.
615EC,(R,)=OforR,=T,.
Itisprovenin[7];insurancepolicyinducesincentivesfortheIS0tomaintainreservecapacityatRq=T,andRq,b=fcl,hforallj=l-Mandh=l-N.
AlthoughZR,>=8R,,&andthereserveenergyallocationdoesnotaffecttheISO'scostfunction,theIS0isresponsibletooptimize$,,tominimizethesocialproductioncostiPCRi,,(RI=fa)foralljandh,andsolves(14)forthereferencevalueofreserveenergyR&'".
ThenIS0calculatesRG:'(RGl=rARz)andpricePfl""',Pe""'(using(IS),(4)),andsendspfi""',PRE,h(i)and&":Itogencos.
Gencosolvestheoptimizationproblem(7)forTal'),RG,"'anddeterminesRGjJ"'(see(22))andsendsthesolutionTG("andRGj,h(iltotheISO.
616h=1-N,themarkettaskisimplemented;ifnot,thepricesP,',Pefi,hwillbetunedproperly(see(23),(24))untilthebalanceissetup,(23)5.
FEATURESANDFURTHERDISCUSSIONS5.
1.
Centralizedvs.
DecentralizedApproachThesocialcost(SC)forthereserveprocurementwillbethesummationoftheexpectedcostsofallindividualswiththeirpaymentsandtwopoliciescanceledideleted,andwithR,,=Tc,foralliandR,=Tc,forallj.
Wehave(see(7),(8),and(1I))Eqn.
(25)includesthereservecapacityandenergycostsandtheconsumers'outagelosses.
Itisclearthattheobjectivefunctionin(25)shouldbethesameasthecentralizedoptimizationthroughmaximizingsocialwelfareorminimizingsocialcostAssumingthatthereservecapacitymarketispurecompetitiveandthereisauniqueoptimalsolutionforbothcentralizedoptimizationproblemanddecentralizedoptimizationproblem.
Withthespotpricingtheoryandthefirstorderconditionsofoptimalproblems(bothminimizationproblemshavethesamesetofoptimalconditions),theshadowpricessolvedinthecentralizedapproachshouldbeequivalenttothepricesbesolvedinthedecentralizedapproach,andbothapproachesmustconvergetothesameoptimalsolutions.
Wecanconcludethat,theproposeddecentralizedapproachcanyieldtheoptimalcondition,whichwillmaximizetheeconomicefficiencyasitscentralizedcounterpart.
5.
2.
DiscussionKeyfeaturesofthenewapproacharesummarizedasfollows:Allparticipantsincludinggencos,consumersareattemptingtosolvethereservecapacitysupplyanddemandandtooptimizetheirownbenefitswithIS0announcingkeyinformationonreservecapacity.
-Twopoliciesareintroduced,namely,insurancepolicyandpenaltypolicy.
InsurancepolicyallowsconsumerstopurchasereservecapacityandtransfersriskofoutagelosstotheIS0simultaneously.
InsurancepolicyinducesincentivesfortheIS0tomaintaintheamountof~91.
reservecapacitysameastheoptimalamountrequestedbyconsumers.
Penaltypolicypenalizesthegencosiftheydonotcommitthereserveprovision,whichinducesincentivesforthegencostocommitthereservecapacityprovisionsameasthecontractedamount.
Thedecentralizedapproachcanmaximizethesocialwelfaresameasthecentralizedapproachwithanobjectivetomaximizesocialwelfare.
Thesystemreliabilityisheld,becausethequantityofreservecapacityplustheamountofloadsheddingisgreaterthanthelossofgeneration.
6.
COMPUTERTESTRESULTSModifiedIEEERTS-96one-areasystem[IO]isusedtodemonstratethesuggestedapproach.
Assumetop14thermalunitsintable7of[IO]areinoperation,whereoilpriceisI6iMbtuandcoalpriceis$4iMbtu.
Thegenerationcostfunctionissupposedtobeaquadraticequation:C,(&,)=0,+b,.
S,+c,.
SG,*(26)Basedontheincrementalheatratedata(seeTable9of[IO]),thecoefficientsq,b,andciineq.
(26)areworkedoutandlistedinTableItogetherwiththeforcedoutageprobabilityOPi.
Table1.
Generatordatacmm-nIUnitSupposethereare20consumersinthemarket,eachofthemhasaquadraticbenefitfunctionaseq.
(27)withthecoefficientsareassumedandlistedinTable24,(Q,)=d,Qq+ej.
e,'(27)Table2.
ConsumerdataAssumetheelectricitymarkethascompletedbeforethereservemarketstartstowork.
Withthecostandbenefitfunctionsgivenabove,themarketclearingpricePwcissolvedasPUc=$55.
9274/MWh.
Assumethereservecapacitycost(opportunitycost)functionsforgencosarequadraticfunctionaseqn.
(28)withthecoefficientslistedinTable3CRi(Rc,)=J.
R,+gj.
R,'(28)617Table3.
ReservecapacitycostdataG,RG,(MW)GI-G43.
17Gr-Gs0.
00Gu-Gli11.
12GI1-GIa11.
33RI=80.
04+-G,0.
1c,RqRslQoc,-Cr0.
542.
22%C6-Clo1.
604.
64%Cil-Cli5.
037.
40%Cla-Cio8.
849.
50%(MW)Rr=X0.
04RL/Qr=7.
28%RrIQ,TotalSocialCastTable5.
Decentralizedapproachvs.
N-lapproach7.
28%15.
22%$3215.
15$3802.
55N-lApproachNewDecentralizedAnnroachmaximizingindividualbenefits.
Thisfactshowsclearlythedrawbacksofthetraditionalreliability-rule-baseddecision,sinceitmightagainstindividualconsumers'willsandleadtoinefficiency.
Therefore,thereservemarketshouldencouragedecentralizedoptimaldecisionandusecentrallyprovidedinformationtoleadtothehestsocialwelfare.
8.
ACKNOWLEDGMENTSTheresearchissupportedbyRGCofHongKongGovernmentandNationalKeyBasicResearchSpecialFund(No.
G1998020305),P.
R.
China,towhomsincereacknowledgementsareexpressed.
9.
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