GOALI: Intelligent Leader Follower Systems for Control of Energy Services

Ohio State University Research Foundation -Do Not Use, Columbus OH

Investigators

Abstract

0118080 Keyhani The collapse of the California electric energy market has made it imperative to recognize that market forces motivated by profit cannot guarantee a secure and reliable energy supply because of the inherent characteristics of electric energy production, transmission and distribution networks. No other systems, such as transportation, gas distribution, airline, trucking are subjected to high prices because of an outage due to maintenance of one of its components. Therefore, it is essential that the electricity market be designed such that the market players' profit motives will mesh with system security and reliability. This proposal will undertake the study of this problem and possible solutions using the appropriate market structure. The Ohio State University (OSU), Illinois Institute of Technology University (lIT), ABB Energy Information Systems (ABB) and Perot Systems (PS) will undertake fundamental research in system game theory to develop a new market structure for planned operation of electric energy services. The PIs propose to develop algorithms to create an efficient, reliable, and secure energy market with the ISO as a market leader who is also a market maker armed with incentive functions, and followers who compete to provide energy for stable operation of the system. The approach is based on the Stackelberg market design strategy developed in the 1970's. We will design a Virtual Market Simulator (VMS) to evaluate the proposed market structure. The VMS simulator will be used for evaluation of system operation yearly on monthly basis, monthly on a weekly basis, weekly on a daily basis, daily on an hourly basis, and hourly on a minute basis up to AGC cycle. The PIs will use the VMS test bed to demonstrate that a market based on leader- follower algorithms can attain perfect market prices for the energy and ancillary services markets. To achieve this goal, they will develop a VMS simulator test bed in collaboration with their industrial partners, ABB and PS, using ABB and PS Systems' knowledge of PJM and California systems historical data. In their VMS simulator, they will construct neural network based predictors to forecast energy demands and time-varying cost of the system load centers (monthly, weekly, daily and hourly). They will formulate an incentive function for each type of generation that the followers must satisfy in their bid prices. The incentive functions will be determined by the leader, taking into account the rational profit motives of the players as well as the system security and reliability. In such market environments, all market players will be followers. In the proposed market structure, the leader will use the knowledge of the systems that he or she is controlling and will estimate the production cost of each type of generation. The leader will thus have the ability to formulate leader-follower optimization strategies and design an appropriate incentive function for each type of generation system. At the same time the market leader can formulate a cost function for the system operation based on the mandated security and reliability by state power boards. In this market structure, the state power board will determine the overall energy policy and set up an auction market for market players to compete in the market under leader-follower market structure. In our formulation, the market leader position is assigned to ISO's. The significance of the proposed work is the creation of a new market structure that will make it feasible for market forces to participate in the development of electric energy systems and to compete in the market while ensuring the reliability and security of systems. The proposed market structure will allow the state government to formulate energy policy and, through proposed incentive functions, to encourage the citizen to participate in its implementation. The proposed market structure will also help market forces develop energy sources, since it will remove the uncertainties of planning plants where they may face bottlenecks in transmissions. Energy users will also benefit by reducing the cost of energy through participation in a load response program and being assured of reliable and secure service.