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Market Overview in Electric Power Systems

Learn about restructuring and components of the electric power industry, market forecasting, unit commitment, arbitrage, asset valuation, and risk management in electricity markets.

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Market Overview in Electric Power Systems

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  1. Department of Electrical and Computer Engineering Illinois Institute of Technology Market Overview in Electric Power Systems Mohammad Shahidehpour March 2002

  2. Restructuring: Decomposition of the three components of the electric power industry Introduction Separation of transmission ownership from transmission control Creation of a competitive electricity market

  3. Introduction Source: PA consulting

  4. Introduction Source: PA Consulting

  5. Introduction Source: PA Consulting

  6. ISO Load Forecasting Market Forecasting Price Forecasting Forward Market: SCUC Ancillary Services Auction Market Operation Congestion Management Schedules Transmission Pricing Bids Market Power Market Monitoring Introduction • Markets • Energy • Ancillary Services • Transmission Load Forecasting Forecasting Price Forecasting Schedules PBUC Bids Arbitrage Bidding Strategy Market Power & Gaming Asset Valuation & Risk Analysis Risk Management GENCOs

  7. Markets Strategies: Reduce the cost of electricity utilization (primary motive for restructuring) Enhance the security of power system through economical means Introduction

  8. Market Structure Market Operators: ISO, PX Market Participants: Genco, Transco, Disco, Retailco, Aggregator, Marketer, Broker, Customer Market Structure and Operation

  9. Overview of the Market Information Forecasting • Two sets of forecasted information: • Load • Electricity price Market Overview

  10. Load Forecasting Basis for price forecasting Most important price driver Load forecasting applications: Unit Commitment, Power System Security, Generation Reserve Allocation, Market Behavior. Market Overview

  11. Load Forecasting Market Overview

  12. Load Forecasting Market Overview

  13. Load Forecasting Market Overview

  14. Price Forecasting Price forecasting is of utmost importance to GENCOs. The price signal reflects the market situation and would lead every action that GENCOs may take. Market Overview

  15. Price Forecasting Market Overview

  16. Price Forecasting Market Overview

  17. Price Forecasting Simulation of the actual system dispatch with system operating requirements and constraints can provide insight on price. Potential price drivers such as line limits, line outages, generator outages, load patterns and bidding patterns can be identified through sensitivity analysis. Market Overview

  18. Unit Commitment in Markets In California and New England, GENCOs will run the unit commitment, which is called price based unit commitment. In PJM and New York, ISO runs the transmission security and voltage constrained unit commitment, which is called security constrained unit commitment. Market Overview

  19. Unit Commitment in Markets PBUC Market Overview

  20. Master Problem (Unit Commitment) violations Generation Scheduling Steady State Subproblems Transmission Subproblem Voltage Subproblem Contingency Subproblem j Transmission Subproblem Voltage Subproblem Unit Commitment in Markets Impact of Reliability Market Overview

  21. Arbitrage in Electricity Markets The usage of arbitrage includes any activity that attempts to buy a relatively under-priced commodity and to sell a similar and relatively overpriced commodity for profit. Market Overview

  22. Market Power and Monitoring Uncertainty and the competitiveness of the market: gaming strategy is an indispensable tool for GENCOs. Identify non-competitive situations in restructured energy marketplaces Provide support for minimizing risks involved in price decisions in restructured energy marketplaces Market Overview

  23. Asset Valuation / Risk Management Asset valuation and risk management requires PBUC, arbitrage and gaming. Market Overview

  24. Asset Valuation / Risk Management Market Overview

  25. Regulation Spinning Reserve Non-Spinning Reserve Replacement Reserve Ancillary Services Auction Social cost minimization Objective Procurement cost minimization Market Overview Pay-as-bid pricing Settlement Marginal Pricing rule Uniform pricing Demand substitution pricing Substitution pricing Supply substitution pricing

  26. Ancillary Services Auction Market Overview

  27. Transmission Pricing • meet revenue expectations, • promote an efficient operation of electricity markets, • encourage investment in generation and transmission, • reimburse owners of transmission assets adequately. Market Overview

  28. Introduction Source: EIA

  29. Thank You Mohammad Shahidehpour

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