Real Time Pricing of Electric Power

111 Pages·2013·1.67 MB·English

Purdue University
Purdue e-Pubs
ECE Technical Reports Electrical and Computer Engineering
4-1-1995
Real Time Pricing of Electric Power
P. O. Asare
Purdue University School of Electrical Engineering
A. W. Galli
Purdue University School of Electrical Engineering
J. S. Lee
Purdue University School of Electrical Engineering
C. A. Lozano
Purdue University School of Electrical Engineering
E. O'Neill-Carillo
Purdue University School of Electrical Engineering
See next page for additional authors
Follow this and additional works at: htp://docs.lib.purdue.edu/ecetr
Asare, P. O.; Galli, A. W.; Lee, J. S.; Lozano, C. A.; O'Neill-Carillo, E.; and Zhao, R. Y., "Real Time Pricing of Electric Power" (1995).
ECE Technical Reports. Paper 120.
htp://docs.lib.purdue.edu/ecetr/120
Tis document has been made available through Purdue e-Pubs, a service of the Purdue University Libraries. Please contact
Authors
P. O. Asare, A. W. Galli, J. S. Lee, C. A. Lozano, E. O'Neill-Carillo, and R. Y. Zhao
Tis article is available at Purdue e-Pubs: htp://docs.lib.purdue.edu/ecetr/120
TR-EE 95-13
APRIL 1995
Real Time Pricing of Electric Power
P. 0. Asare
A. W. Galli
J. S. Lee
C. A. Lozano
E. O'Neill-Carillo
R. Y. Zhao
Purdue University
School of Electrical Engineering
April 1995
Table of Contents
Chapter I Alternative Real Time Pricing Infrastr~~cturebsy C. A. Lozano. . .
1.1 Categorization of prices . . . . . . . . . . . . . . . . . . . . . .
1.2 Generation and publication of prices. . . . . . . . . . . . . . . .
1.3 Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . .
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Chapter II Advantages and Disadvantages of Real Time Pricing
by P.O. Asare . . . . . . . . . . . . . . . . . . . . . . . . . . .
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Real time pricing of electricity . . . . . . . . . . . . . . . . . . .
Advantages of real time pricing . . . . . . . . . . . . . . . . . .
Illustration of customer response to RTP . . . . . . . . . . . . .
Potential drawbacks of RTP . . . . . . . . . . . . . . . . . . .
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
References . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Chapter Ill Advantages of Real Time Pricing for Electric Power Utilities
by E. 0'Neill.Carillo . . . . . . . . . . . . . . . . . . . . . . . .
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Real time pricing . . . . . . . . . . . . . . . . . . . . . . . . .
Real time pricing and the electric utilities. . . . . . . . . . . . .
Use of RTP in load .frequencyc ontrol . . . . . . . . . . . . . . .
Conclusions. . . . . . . . . . . . . . . . . . . . . . . . . . . .
References . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Chapter I V Non-Utility Generation (Open Access and its Issues)
by A. W . Galli . . . . . . . . . . . . . . . . . . . . . . . . . . .
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Utility regulation. . . . . . . . . . . . . . . . . . . . . . . . . .
Wheeling . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Economic issues . . . . . . . . . . . . . . . . . . . . . . . . . .
Operational issues . . . . . . . . . . . . . . . . . . . . . . . .
Security issues . . . . . . . . . . . . . . . . . . . . . . . . . . .
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
References . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Chapter \/ Power Wheeling and its Cost by R. Zhao. . . . . . . . . . . . .
v . 1 Abstract. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
v.2 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . .
v.3 Wheeling definition and background . . . . . . . . . . . . . . .
v.4- Wheeling cost models . . . . . . . . . . . . . . . . . . . . . .
V.5 Muhi-area wheeling . . . . . . . . . . . . . . . . . . . . . . . .
V.6 Wheeling concerns for reactive power . . . . . . . . . . . . . .
V.7' Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . .
References . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Chapter \/I Calculation of Marginal (Incremental) Fuel Costs of an RT13
Program by J. S. Lee . . . . . . . . . . . . . . . . . . . . . .
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . .
A price system that considers electricity supply and demand . .
Customer response to electricity prices . . . . . . . . . . . . .
Using existing utility "software" to calculate RTP . . . . . . . .
A modified real time pricing program . . . . . . . . . . . . . .
A methodology for the modified real time price calculation . . .
Two-stage unit commitment problems . . . . . . . . . . . . . .
Lagrangian relaxation solution method . . . . . . . . . . . . .
Calculating the final RTP price. . . . . . . . . . . . . . . . . .
Testing the method . . . . . . . . . . . . . . . . . . . . . . .
Empirical results . . . . . . . . . . . . . . . . . . . . . . . . .
Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . .
References. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Introduction
'The EE 635 course in the School of Electrical Engineering at Purdue University
covers the operation and control of electric power systems. The main course elements
are economic dispatch, unit commitment, and generation control. Each semester, I ask
the students to prepare a term paper on a topic of present interest. The student papers
are on different aspects of a given subject. These papers are assembled into a
technical report. This semester, the topic is "real time pricing" (RTP), an innovative
pricing technique in which the price of electrical energy varies. The concept of RTP
allows added "control" of the demand and some proponents feel that the power system
can be operated more efficiently. The topics cover RTP techniques, wheeling, cost of
energy, and proposed configurations of the RTP technique.
G. T. Heydt
April, 1995
Chapter I
Alternative Real Time Pricing Infrastructures
C. A. Lozano
Introduction
Red Time Pricing (RTP) brings information concerning the time-varying costs of
e1e:ctricity generation, transmission, and distribution to the consumer. The theory of real
time pricing was developed under the name of spot pricing [I]. Real Time Pricing of
e1e:ctricity is based on inclusion of time- variable costs of electricity supp~lyin the electricity
rates. Under RTP, operation of various end use devices can be optimized in order to
ca:pturet he savings associated with the variability of prices. The ideal real time price is a
combination of the following time- variable components: [lo]
Marginal generation he1 cost
Marginal generation and network maintenance cost
Marginal cost of network losses
Generation and network quality of supply cost
Under real time prices, price patterns and magnitude of prices change every day. The last
component can be thought of as a time- variable demand charge which coincides with
times of high utility loads. In contrast to demand charges under Time of Use rates, under
RlrP the highest prices occur closer to the time of supply constraints, and not necessarily
during the high period demand for the customers [I]. Real time pricing is also applicable
to reactive power, as shown in [8].