Restructured Electricity Mkts

Cheatsheet Content

### Restructured Markets: Overview (Module 1) - **Models:** - **POOLCO:** Centralized exchange. - **Bilateral Contract:** Direct buyer-seller agreements. - **Hybrid:** Combines elements of both. - **Key Concepts:** - **ISO (Independent System Operator):** Manages grid, ensures reliability. - **PX (Power Exchange):** Facilitates energy trading. - **Market Operation:** Day-ahead, hour-ahead. - **Elastic/Inelastic Operation:** Responsiveness to price changes. - **Transmission Pricing:** Cost allocation for using transmission lines. - **Congestion Pricing:** Mechanism to manage grid constraints. - **OASIS:** Open Access Same-Time Information System. - **Methods:** Contract path, MW-mile. ### Congestion Management (Module 2) - Full Notes - **Definition:** Congestion occurs when the desired power flow exceeds the physical capacity of transmission lines, leading to potential instability or economic inefficiency. Managing this involves strategies to ensure reliable and efficient grid operation despite these bottlenecks. - **Approaches:** - **Market-Based Methods:** - **Congestion Pricing:** Uses financial incentives (e.g., higher prices in congested areas, lower prices in surplus areas) to encourage generators to produce less or consumers to consume less in congested zones, or to shift transactions to less congested paths. - **Financial Transmission Rights (FTRs) / Transmission Congestion Contracts (TCCs):** Financial instruments that entitle holders to a stream of payments related to congestion charges, allowing market participants to hedge against congestion costs. - **Locational Marginal Pricing (LMP):** Prices electricity differently at various locations (nodes) in the grid, reflecting the cost of supplying the next megawatt of electricity to each specific location, including congestion costs. - **Non-Market-Based Methods (Operational Solutions):** - **Redispatch:** Adjusting the output of generators (increasing generation in one area, decreasing in another) to relieve overloaded lines. This is often done by the ISO/RTO. - **Curtailment:** Reducing or stopping power flow from certain generators or to certain loads, typically as a last resort to prevent system collapse. - **Load Shedding:** Deliberately disconnecting customers from the grid to reduce demand and relieve severe congestion or maintain system stability. - **Out-of-Merit Order Dispatch:** Dispatching more expensive generators or less efficient units to alleviate congestion, even if they are not the most economically optimal choice. - **Types of Congestion:** - **Zonal Congestion:** Occurs across large geographical regions or between defined pricing zones. Management often involves broader market mechanisms. - **Inter-Zonal Congestion:** Bottlenecks on transmission lines connecting two different pricing zones or control areas. - **Intra-Zonal Congestion:** Occurs within a single pricing zone, typically on specific local transmission lines. Often addressed through redispatch or local market adjustments. - **Key Metrics for Congestion Analysis:** - **ATC (Available Transfer Capability):** The amount of additional power that can be transferred over a transmission path or between two areas, considering all relevant system limitations (thermal, voltage, stability). It is calculated as TTC minus existing transmission commitments and a transmission reliability margin. - **TTC (Total Transfer Capability):** The maximum amount of electric power that can be transferred over a transmission path or between two areas under specified system conditions while maintaining system reliability. - **PTDF (Power Transfer Distribution Factor):** A sensitivity factor that quantifies the change in flow on a particular transmission line for a 1 MW transfer between a specific injection (source) bus and a specific withdrawal (sink) bus. Used to identify which transactions contribute most to line loading. - **LODF (Line Outage Distribution Factor):** A factor that quantifies the change in flow on a remaining transmission line due to the outage of another specific line. Critical for N-1 contingency analysis and understanding cascading effects. - **Price Area Congestion Management:** This involves dividing the transmission network into "price areas" or "zones" where the price of electricity is uniform. Congestion occurring *between* these areas is managed by market mechanisms (e.g., inter-zonal congestion charges or flow-based market coupling), while congestion *within* an area might be managed by redispatch or local LMPs. The goal is to simplify market operations while still reflecting the cost of transmission constraints. ### Transmission Pricing & Loss Allocation (Module 3) - **Transmission Pricing Methods:** - **Rolled-in Pricing:** Averaged transmission costs. - **Postage Stamp:** Flat rate regardless of distance. - **MW-Mile Method:** Based on power flow and distance. - **Proportionate Sharing:** Costs shared based on usage. - **Graph Theory:** Uses network topology for allocation. - **Equivalent Bilateral Exchange:** Models power transfers between nodes. - **Z-bus Allocation:** Uses impedance matrix for allocation. - **Marginal Pricing:** Based on marginal cost of transmission. - **Composite Pricing:** Combines different methods. - **Loss Allocation Methods:** - **Proportional Distributing:** Losses distributed proportionally. - **Pro-rata:** Based on usage. - **Increment-loss Allocation:** Based on incremental losses due to a transaction. - **Proportionate Sharing:** Losses shared proportionally. ### Electric Utility Market & OASIS (Module 4) - **Market Structures (Examples):** California Market, New York Market, PJM Interconnection, ERCOT ISO, New England ISO, MID WEST ISO. - **OASIS (Open Access Same-Time Information System):** - **Purpose:** Provides transparency and non-discriminatory access to transmission services. - **Structure:** Defined phases for implementation. - **Key Functions:** Posting information, transfer capability calculation, transmission services. - **ATC Calculation:** Methodologies to determine available capacity. ### Hedging Tools & Risk Management (Module 5) - **Sources of Electricity Market Risks:** Volatility, supply/demand imbalances. - **Risk Management Tools:** - **Value at Risk (VaR):** Measures potential financial loss. - **Bidding Strategies:** Techniques for offering bids in markets. - **Deterministic Method:** Uses fixed parameters for analysis. - **Stochastic Method:** Incorporates randomness and probability. ### Course Outcomes - Analyze key issues in electric utility restructuring & different models. - Implement market-based and non-market-based congestion management. - Describe different electric utility markets and OASIS. - Understand hedging tools for risk management and design bidding strategies. ### Reference Books - Chow, Wu, Momoh: "Applied Mathematics for Restructured Electric Power Systems" - Zhang: "Restructured Electric Power Systems: Analysis of Electricity Markets" - Alomoush, Shahidehpour, Dekker: "Restructured Electrical Power Systems" - Lai: "Power System Restructuring and Deregulation_ Trading, Performance and Information Technology"