A New Long Run Marginal Cost Pricing Method for Revenue Reconciliation of Transmission Network in Restructured Power System

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Abstract

The long-run incremental and marginal pricing are two different approaches for pricing transmission and distribution networks usage. The main difference between these two methods is to the way the cost of using the network is calculated. In the former approach, simulations are used, and in the latter, sensitivity analysis methods are used to determine the cost. In this paper, a novel analytical method, based on long-run marginal pricing, with a new sensitivity analysis is presented-- a method that can show the effect of power injections on the buses over the long-term costs of the network reinforcement. Sensitivity analysis consists of three partial derivatives, including - the sensitivity of network power flow due to increased power injection at the bus, - the sensitivity of the network reinforcement time according to the power lines change, and the sensitivity of the present value of future reinforcement with respect to changes in time to reinforce. A practical distribution network, which is part of the transmission network, has been used to illustrate the theoretical and practical principles of the proposed method. The results of the incremental and marginal approaches are compared in different system conditions. The results indicate that the proposed method can produce not only the forward-looking charges that reflect the extent of network utilization level but also the distance between generation and consumption. The proposed method will also illustrate the factors that affect network tariffs.

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References

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Energy Engineering and Management
Volume 8, Issue 3
October 2018
Pages 2-13

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