ECE666 Winter 2019

Lecture Examples: Electricity Markets

1. Consider a genco that owns three generating units with cost characteristics as given:
C1 (P1 ) = 0.04 P12 + 1.4 P1 + 15 $ / h
C2 (P2 ) = 0.05P22 + 1.6 P2 + 25 $ / h
C3 (P3 ) = 0.02 P32 + 1.8P3 + 20 $ / h

Find the optimal dispatch schedule of the genco seeking to maximize its profit, under perfect
market competition, when the market price is: a) 8.2 $/MWh b) 10.2 $/MWh, given that its own
contracted demand is 350 MW.

2. Consider a double-auction electricity market with three suppliers A, B and C and three customers- 1,
2 and 3. Their respective supply and demand bid curves are given below.

ρ ASELL = 0.5PG A + 20 ρ1BUY = 250 − PD1

ρ BSELL = 0.5PGB ρ 2BUY = 220 − 0.35PD2
ρ CSELL = 0.6 PGC + 10 ρ3BUY = 200 − 0.5PD3
a. Find the electricity market equilibrium- ‘market clearing price’, and the market clearing dispatch
of each participant.
b. Consider generators-A and C are located in the West System while B is located in the East System.
Customer-3 is located in West and customers-1 and -2 in the East System. Given that the Western-
Eastern interconnection has a total capacity of 150 MW, find the new market clearing prices and
the optimal dispatch.

3. Consider the 3-bus system shown in the figure below. Bus-1 and bus-3 have generators with 10
$/MWh and 20 $/MWh average cost of generation, respectively. Bus-2 has a load of 180 MW, bus-3
has a load of 320 MW. The three transmission lines have equal impedances.
a. Find the LMP at each bus, if the transmission line limits are ignored.
b. Find the LMP at each bus, if the transmission lines have a maximum capacity = 200 MW
4. Consider the 3-bus system shown. The line reactance are in per unit quantities.

The following information is also given:

– Generator at Bus-1 has a cost function C1 (PG1 ) = α1PG1 + β1PG21
– Generator at Bus-2 has a cost function C2 (PG 2 ) = α 2 PG 2 + β 2 PG22
– Bus-3 has a load (PD3) PD3 = PE3 + PC3
– PE3 is the price elastic component; PC3 is the fixed component (non-elastic)
– Customer Benefit Function: W3(PD3) = α3PE3
– Given that α1 = α2=0, β 1=1, β2=1.675, α3 = 30 and PC3 = 5

Find the LMP at the buses when:

(a) line limits are not considered
(b) Line limit on line 2-3 is 10 p.u.