SGER: Power System Locational Price Reconcillation

University Of Minnesota-Twin Cities, Minneapolis MN

Investigators

Abstract

The United States is Deregulating its Electric Power Systems in the manner as other large public service systems such as airlines, telephone, natural gas, and banking were deregulated. Electric power system deregulation is justified using the same logic, that is, to lower costs to consumers and foster innovation and development. This has not been universally attained as seen in the problems faced in California in recent years. The US Department of Energy's Federal Energy Regulatory Commission (FERC) has recently released a Standard Market Design (SMD) document that introduces, among other issues, the problem of enabling two operations systems to reach consistent Locational Marginal Prices (LMP's) along their boundary (seamless operation). This problem does not have a well-developed technical solution. Solution of this problem is critical to the US economy and security. Intellectual Merit The intellectual merit of this proposal is considerable. Engineers and economists have developed means of calculating the price that should be paid to suppliers and paid by consumers at specific locations throughout a power system. These prices are derived using Optimal Power Flow (OPF) and Unit Commitment (UC) algorithms that have been developed over the past 30 years. Several regions now using these algorithms in computer control systems have experienced "seams problems" along their boundary (e.g. the PJM and NYISO boundary). The intellectual challenge is to use economic signals, methods of distributed processing, and alternating current (AC) power flow analysis to solve this problem. Tutorial courses for both academic and industry audiences will be conducted as the research unfolds. Broader Impact The impact of this research will be broad indeed. Throughout the US there are difficulties involved in trading electric energy. A comprehensive solution would allow consumers to purchase electric energy at the lowest possible cost even if that meant buying from a source on the other side of the continent. Consumers who wish to purchase from sources offering green energy (electric power generated with renewable sources) will have wider options open to them, as transmission congestion would be properly reflected in the prices paid. Without a consistent locational pricing mechanism consumers will be forced to deal only with local suppliers, leading in many cases to higher prices. The project will hold a workshop for experts from academia and industry to discuss the problems and solutions found. Minority and women experts will be sought for inclusion in this workshop. Finally a set of Web pages with is set up to disseminate reports and results. Interdisciplinary Education Graduate students involved in this research will be required to obtain a strong academic interdisciplinary background that includes formal training not only in electrical engineering, mathematics and computer science, but also in economic theory and applied economics. Education requirements were discussed at a workshop jointly sponsored by NSF and the Electric Power Research Institute (EPRI) in March 2002. The workshop revealed that at present only a few graduate programs provide individuals who have the appropriate interdisciplinary background required. The curriculum for the students involved in the proposed research is designed to provide researchers and future educators who have the proper background required for solving the nation's critical electric power deregulation problems.