Short-Term operating strategy with consideration of bilateral contracts and system uncertainty

Abstract

Since several past decades, both developed and developing countries have embarked on a program of deregulating their power sectors from vertically integrated monopoly to a more competitive market. A partially deregulated structure has been experienced by some countries and tends to be employed as a future structure by others. In this dissertation, a method for determining short-term operating strategy both in a vertically integrated and partially deregulated structure by considering system uncertainty, i.e. demand and generating unit uncertainties, is proposed. For solving the demand uncertainty, a decision analysis model is utilized. Meanwhile, unit uncertainty is modelled by a two-state Markov model. A deterministic criterion is considered in defining spinning reserve requirement. Several scenarios are created based on the demand uncertainty model and the proposed spinning reserve strategies. The best strategy is then selected among the developed scenarios which give the minimum expected total cost. In this dissertation, the term of total cost comprises expected generation cost and risk cost. As a comparison, a method for determining best operating strategy based on probabilistic criterion is also proposed. One of the arising problems under partially deregulated structure concerns with maintaining the reliability supply for both the original system demand and the bilateral contracted demand, which is one of the consideration in this dissertation. In addition, the determination of an acceptable spinning reserve price by considering system uncertainty is one of the key contributions of this dissertation. The price is determined by balancing the increase of total cost as a consequence of providing spinning reserve to the contracted demand and the benefit from reserve selling. Sensitivity analysis with respect to the variation of contracted demand and the number of involved GENCO is presented.