Electricity Market Modelling and Economic Evaluation of the Impact of Nodal Pricing on Transmission System Congestion

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Copyright: Ganga, Sadhvi
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Abstract
The choice between a zonal or nodal pricing regime has been one of the most contentious elements of electricity market design. The pricing regime adopted has implications for real-time operational aspects such as congestion management, as well as for long-term investment decision-making for generation, networks and major loads, via economic locational price signalling. The debate over the potential implications of the pricing regimes on market power and contracting continues. The ability of the pricing regime to capture the fidelity of the underlying power system network is critical for efficient market operation. Linear programming techniques are frequently incorporated in the solution of market dispatch and a fundamental component is the set of constraint equations. Thermal contingency constraints are a very important sub-set of the constraints represented. An aggregative zonal pricing approach may include thermal contingency constraints which incorporate static coefficients of market variables calculated exogenously to the market model. In contrast, an explicit nodal pricing approach can enable dynamic endogenous formulation of these constraints within the market model. Therefore, these zonal and nodal modelling approaches both aim to solve the market dispatch problem, but define the problem differently. These differences potentially have significant implications for market operation and in particular for investment decision-making. This thesis empirically investigates the impact of the linear program feasible solution space definition on electricity market optimal dispatch outcomes, comparing the zonal and nodal modelling approaches. The New South Wales transmission network within the Australian National Electricity Market is investigated over a fifteen-year forecast period, for planning studies to guide network investment. The potential economic efficiency of an intra-zonal network investment is also assessed. Time-sequential security constrained economic dispatch is simulated for the current zonal approach and for the nodal approach developed in this thesis. The results demonstrate that the differences in spot price, congestion and dispatch outcomes between the modelling approaches can be substantial, and different paths for network investments might potentially be progressed. The results highlight that tools used in such optimisation processes should simultaneously capture the intra- and inter-zonal market dynamics, and the trade-offs for network investment within and between zones. The nodal approach developed could play a valuable role in improving the network investment decision-making process.
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Author(s)
Ganga, Sadhvi
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MacGill, Iain
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Publication Year
2014
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Thesis
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Masters Thesis
UNSW Faculty
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