March 6, 2009

ECE760 Electricity Markets

Assignment #2
German Escobar Zuluaga
ID 20284730
Problem1
The Ybus for the system is given by

Y bus =

10 j
0
10 j
0
10 j 10 j
10 j
10 j 20 j

Bus 1 is the slack bus. Bus 2 is a PV bus. Bus 3 is a PQ bus. We will use the Newton-Raphson method
in the solution, noting that V2 and V3 are given, and therefore we can simplify the computation. The
unknown variables are 3 and V3. Thus, the Jacobian will be a 3X3 matrix.
Defining the unknown vector
i
x i=
the three unknown variables to be solved are
V i

[ ]

[ ]

x i=

3
V3

Since there are N = 3 buses for problem 1, powerflow equations constitute 2(N > 1) = 4 equations.
However, there is one voltage-controlled bus, bus 2. Therefore V2 and the equation for Q2(x) and P2(x)
could be eliminated,since is 2 ,constant.
P 3=V 3 V 1 Y 31 sin 31 V 3 V 2 Y 32 sin 32

Q3=[V 3 V 1 Y 31 cos 31 V 3 V 2 Y 32 cos 32 Y 33 V 23 ]

Putting in the known values of P3 = PD3 = 0.9 and Q3 = QD3 = 0.4, 2 = 3 = 0; V2 = 1.05 and V1
= 1.0, result:
0.9=10 V 3 sin 310.5 V 3 sin3

0.4=[10 V 3 cos 3 10.5V 3 cos 3 20 V 32 ]

In using Newton-Raphson the next step is to put the equations in the form f(x) = 0. The simplest way
is to subtract the left sides from the right sides, or viceversa. It does not matter which we do: the
solution algorithm will be identical in either case, we get:
f 1 x =20.5 V 3 sin3 0.9=0
2

f 2 x =20.5 V 3 cos 320 V 30.4=0

The first component of x is 3 ,the second is V3; with that understanding we will not always use the
x1, x2 notation.
Next, we find the Jacobian matrix,

[ ][

f1
x1
J x =
f2
x1

f1
x2
20.5V 3 cos 3
20.5sin 3
=
f2
20.5 V 3 sin 3 20.5 cos 340 V 3
x2

In the 2X2 case it is so easy to find the inverse that we will solve using:
x v1= x v [ J x v ]1 f x v

(1.1)

Starting with a flat profile (i.e 3 ,= 0 and V3 = 1.0), we get

0
J 0= 20.5
0
19.5

0 1

J =

0.04878
0
0
0.05128

[ ]

f x =

0.9
0.1

Then, using (1.1) yields

[][

][ ] [

0
0.9 = 0.04390
x 1= 0 0.04878
1
0
0.05128 0.1
0.005128

Continuing to the next iteration gives us

1

J =

20.58531 0.89966
0.90428 19.72495

f x 1 = 0.00428
0.02041

1 1

J =

0.04868 0.00222
0.00012 0.05080

Note that x1 is really a very good estimate. We want f(x) = 0 and already f(x1) is almost zero.
Continuing the next iteration we have
2

x=

][

][

][

0.04390
0.04868 0.00222 0.00428
0.04374

=
1.005128
0.00012 0.05080 0.02041
1.00409

Noting that the change between x1 and x2 is less than 0.00005, we stop the iteration. Alternatively,
we can compute f(x2). We get

f x 2 = 0.00005
0.00022

Which is substantially small.

Thus, the objective of finding the x for which f(x) = 0 seems very well met. Finally, to complete the
problem, we find P1 and P2:
P G1=P 1=V 1 V 2 Y 12 sin1 2V 1 V 3 Y 13 sin1 3

=010.0409 sin 0.04374=0.439

QG1=Q1 =[V 1 V 2 Y 12 cos 1 2V 1 V 3 Y 13 cos 13 V 21 Y 11 ]
=[010.0409 cos 0.0437410]=0.0313
P G2=P 2=V 1 V 2 Y 21 sin 21 V 2 V 3 Y 23 sin 23

=010.5429 sin 0.04374=0.461

QG2=Q 2=[V 1 V 2 Y 21 cos 21 V 2 V 3 Y 23 cos 2 3V 22 Y 22 ]
=[010.5429 cos 0.0437411.025]=0.4922

This completes the problem

Problem 2
The Ybus for the system is given by

20 j 10 j
10 j
Y bus = 10 j 10 j
0
10 j
0
10 j

Bus 1 is the slack bus. Bus 3 is a PV bus. Bus 2 is a PQ bus. We will use the Newton-Raphson method
in the solution, noting that V3 is given, and therefore we can simplify the computation. The unknown
variables are 2, 3 and V2. Thus, the Jacobian will be a 3X3 matrix.
Defining the unknown vector

[ ]

x i= i
V i

the three unknown variables to be solved are

[]

2
x i= 3
V2

Since there are N = 3 buses for problem 6.25, (6.6.2) and (6.6.3) constitute 2(N > 1) = 4 equations.
However, there is one voltage-controlled bus, bus 3. Therefore V3 and the equation for Q3(x) could be
eliminated.

y k =P k =P k x =V k Y kn V n cos k n kn

(6.6.2)

n =1

y k N =Q k =Q k x=V k Y kn V n sin k nkn

(6.6.3)

n=1

k = 2, 3, ... , N
Using (6.6.2) and (6.6.3) to compute

y i=

][

P i
PP [ x i]
=
Qi
QQ [ x i]

P 2 0=P 2P 2 x=P 2 V 2 0 {Y 21 V 1 cos[2 01 0 21]

Y 22 V 2 cos[ 22]Y 23 V 3 cos[2 03 023 ]

(1.1)

P 3 0=P 3P 3 x =P 3V 3 0{Y 31 V 1 cos [ 3 01 031 ]

Y 32 V 2 cos[ 3 0 2 032]Y 33 V 3 cos[33 ]

(1.2)

Because we know V3, we can eliminate the equation involving Q3(x). We need the equation involving
Q2(x). to solve for V2, :
Q2 0 =Q2Q 2 x =Q 2V 2 0 {Y 21 V 1 sin[2 0 1 0 21]
(1.3)
Y 22 V 2 sin [22 ]Y 23 V 3 sin [ 2 03 0 23 ]
Step 1 compute y 0
P 2 0=11.0 [10 1.0cos 90101.0cos 9001.0cos 90]

P 2 2=1

P 3 0=0.41.0 [10 1.0cos 900 1.0 cos9010 1.0cos 90]

P 3 0=0.4

Q2 0 =0.41.0 [101.0 sin9010 1.0 sin9001.0sin 90]

Q2 0 =0.4

Step 2 compute the 3X3 Jacobian matrix

J1 22=

P2
=V 2 [Y 21 V 1 sin 2 1 21Y 23 V 3 sin 2323]
2

J1 23=

P2
=V 2 Y 23 V 3 sin 2 3 23
3

J132=

P3
=V 3 Y 32 V 2 sin 3232
2

J133=

P3
=V 3 [Y 31 V 1 sin 31 31 Y 32 V 2 sin3232]
3

J2 22=

P2
=V 2 Y 22 cos 22Y 21 V 1 cos 2121Y 22 V 2 cos 22 22Y 23 V 3 cos 2 3 23
V 2

J2 32=

P3
=V 3 Y 32 cos 3 232
V2

J3 22=

Q2
=V 3 [Y 31 V 1 cos 3131Y 32 V 2 cos 3232]
2

J3 23=

Q2
=V 2 Y 23 V 3 cos 2323
3

Q 2
=V 2 Y 22 sin 22Y 21 V 1 sin 2121 Y 22 V 2 sin 2222 Y 23 V 3 sin 2 323
V 2
Therefore,
J4 22=

J1 22=1.0[10 1.0sin/20 1.0 sin/2]=10

J1 23=1.00 1.0sin /2=0

J132=1.00 1.0sin /2=0

J133=1.0[ 101.0 sin/201.0 sin/2]=10

J2 22=1.0 10 cos /2101.0 cos /210 1.0cos / 201.0 cos/2=0

J2 32=1.0 01.0 cos/2=0

J3 22=1.0[101.0cos /201.0 cos /2]=0

J3 23=1.00 1.0cos /2=0

J4 22=1.0 0 sin/2101.0sin /210 1.0sin / 2101.0sin /2=10

The Jacobian matrix J(0):

10 0 0
J 0= 0 10 0
0 0 10

(1.4)

10 0 0
0 10 0
0 0 10

][ ] [ ]
2 0
1
3 0 = 0.4
0.4
V 2 0

Solving
2 0=

1
=0.1
10

2 0=

0.4
=0.04
10

V 2 0=

0.4
=0.04
10

Step 4

x 1=x 0 x 0

[][ ][ ]

0
0.1
0.1
= 0 0.04 = 0.04
1
0.04
0.96

We proceed to the next iteration using the new values 2 = > 0.1, 3 = > 0.04, and V2 = 0.96.
Substituting in (1.1), we get P2(x1) = > 0.9584, and thus P12 = > 1 > ( > 0.9584) = > 0.0416.
Similarly, using (1.2) and (1.3), we get an updated mismatch vector:
1

[ ][ ]
P 2 0
0.0416
=
P 3 0
0.00011
0.06396
Q2 0

Note: In one iteration the mismatch vector has been reduced by a factor of about 10. Calculating J1, we
find that

J 1=

9.55204
0
0
0
9.992
0.39989
0
0.39989
10.008

(1.5)

The matrix should be compared with J0 in (1.4). It has not changed much. The off-diagonal matrices
are not longer zero, but their elements are small compared to the terms in the matrix diagonal. The
matrix diagonal itself has not changed much. The same observation is true about the inverses. The
updated inverse is

0.10470
0
0
J 1=
0
0.1002 0.004
0
0.004 0.1001
1

(1.6)

Comparing (1.6) with inverse of J0 , we do not see much change. For the second iteration we find that

x 2=x 1 x 1

[ ][

][

0.1
0.00436
0.10436
= 0.04 0.00001 = 0.03973
0.96
0.00639
0.9536

To continue to the third iteration we need to find the current mismatch

[ ][ ]
P 2 0
0.00663
P 3 0 = 0.00280
0.00941
Q2 0

x 3=x 2 x 2

][

][

0.10436
0.0007
0.10506
= 0.03973 0.00028 = 0.04005
0.9536
0.00094
0.95265

To continue to the fourth iteration we need to find the current mismatch

2

[ ][ ]
P 2 0
0.00099
P 3 0 = 0.00039
0.00145
Q 2 0

The mismatch has been reduced by at least a factor of 200 and is small enough. On that basis we could
stop here. So we stop with the values 2 = > 0.10506, 3 = > 0.04005, and V2 = 0.95265.
It remains to calculate the generator outputs SG1 and QG2 using the calculated values of 2, 3, and V2.
Ge get:
P G1=P 1=V 1 V 2 Y 12 sin1 2V 1 V 3 Y 13 sin1 3

=9.5265 sin 0.105069.5265sin 0.04005=1.38045

QG1=Q1 =[V 1 V 2 Y 12 cos 1 2V 1 V 3 Y 13 cos 13 V 21 Y 11 ]
=[9.5265 cos 0.1050610 cos0.0400520 ]=0.534
2

QG2=Q 2=[V 1 V 2 Y 21 cos 21 V 2 V 3 Y 23 cos 2 3V 2 Y 22 ]

=[9.5265 cos0.105060 cos 0.040059.0754]=0.3986

This completes the problem.
Problem 3
PG2 = 0.3
V2 = 0.95
P2 = 0.3
P3 = > 0.5
Q3 = > 0.2

Defining

[ ]

i
x i=
V i

the three unknown variables to be solved are

[]

2
x i= 3
V3

Since there are N = 3 buses for problem 1, (1.1) and (1.2) constitute 2(N > 1) = 4 equations. However,
there is one voltage-controlled bus, bus 2. Therefore V2 and the equation for Q2(x) could be eliminated.
N

y k =P k =P k x =V k Y kn V n cos k n kn

(1.1)

n =1

y k N =Q k =Q k x=V k Y kn V n sin k nkn

(1.2)

n=1

k = 2, 3, ... , N
Using (1.1) and (1.2) to compute

][

y i= P i = PP [ x i]
Qi
QQ [ x i]

P 2 0=P 2P 2 x=P 2 V 2 0 {Y 21 V 1 cos[2 01 0 21]

Y 22 V 2 cos[22]Y 23 V 3 cos[2 03 0 23 ]
P 3 0=P 3P 3 x =P 3V 3 0Y 31 V 1 cos [3 01 0 31]

Y 32 V 2 cos [ 3 0 2 032 ]Y 33 V 3 cos[33 ]

Q3 0=Q 3Q3 x =Q3V 3 0[Y 31 V 1 sin [ 3 01 031]]

Y 33 V 3 sin [ 33]Y 32 V 2 sin[3 0 2 0 32]

Step 1 compute y 0
P 2 0=0.30.95[25.39681.0 cos 9024.24570.95cos 9021.07111.0cos 90]
P 2 2=0.3
P 3 0=0.51.0 [11.11111.0 cos9010 1.0cos9021.07111.0 cos 90]
P 3 0=0.5

 Q3 0=0.21.0[11.11111.0sin 9021.07111.0sin 9021.0711 1.0sin 90]

Q2 0 =0.2
The Ybus for the system is given by

Y bus =

25.37683 j
14.2857 j
11.1111 j
14.2857 j
24.26571 j
10
11.1111 j
10
21.09111 j

Bus 1 is the slack bus. Bus 2 is a PV bus. Bus 3 is a PQ bus. We will use the FDLF method in the
solution, noting that V2 is given, and therefore we can simplify the computation. The unknown
variables are 2, 3 and V3.

B=

24.26571 j
10
10
21.09111 j

B v = P x v

Aplying

[]

P2
0
2
24.26571 j
10
0.95

=
10
21.09111 j 3
P3
V3

][ ]

and aplying

x v , with the V2 equation stripped away, becomes

B Vv = Q
v

21.09111V 3 =

Q3
V 3

In this simple case we can use matrix inversion to get the explicit iteration formulas,

[ ][

2
0.05122 0.02428
=
0.02428 0.05893
3

Q3
V 3 =0.04741
V 3
v

[]

P2
0.95
P3
V3

The results of the iterations are tabulated in Table 1 starting with initial values of 2 = 3 = 0 and V3 =
1.0. The tabulated values of 2 and 3 are in radians.

Iteration
number
0
1
2

P 2

V3

0
0
0

0
-0.02
-0.02

1
0.97
0.97

0.32
0.01
0

P 3
-0.5
-0.03
0

Q 3
-0.68
-0.01
0

Problem 4
First, we will assume that each utility operates independently; that is, each will supply its own load
from its own generation. The results of an independent economic dispatch are given here.
Utility 1

P1 =400 MW

= 90 $/MWh

Operating cost, utility 1 = 21,605.1 $/h

Utility 2

P2 = 250 MW

= 42.5 $/MWh

Operating cost, utility 2 = 6,877.9 $/h

Utility 3

P3 = 350 MW

= 37.1 $/MWh

Operating cost, utility 3 = 8,086.6 $/h

Total operating cost for all utilities = 21,605.1 + 6,877.9 + 8,086.6 $/h = 36,569.6
Now suppose the three utilities are interconnected by several transmission circuits such that the three
utilities may be thought of, and operated, as one system. If we now dispatch them as one system,
considering the loads in each utility to be the same as just shown, we get a different dispatch for the
units. (using results from GAMS)
LOWER

LEVEL

UPPER

MARGINAL

p1 50.000 177.456 250.000 -9.63E-10

p2 60.000 312.018 400.000
EPS
p3 100.000 510.526 600.000
.
LOWER
---- VAR cost

LEVEL

-INF 30850.762

P 1=177.456 MW
P 2=312.018 MW
P 3=510.526 MW
= 49.942 $/MWh

UPPER
+INF

MARGINAL
.

Total generation for the entire system = 1000.0 MW

Operating cost, utility 1 = 6,033.46 $/h

Operating cost, utility 2 = 9,744,44 $/h
Operating cost, utility 3 = 15,072.86 $/h
Total operating cost

= 30,850.76 $/h

b. Interchange power = 62.018 MW from utility 2 to utility 1

Interchange power = 160.526 MW from utility 3 to utility 1
Note that the utility 1 is now generating less, than when it was isolated, and utilities 2 and 3 are
generating more. If we ignore losses, we can see that the change in generation in each utility
corresponds to the net powerflow over the interconnecting circuits. This is called the interchange
power. Note also that the overall cost of operating both systems is now less than the sum of the costs to
operate the utilities when each supplied its own load.
Let's price the sale at the cost of generation plus one-half the savings in operating costs of the
purchaser. This splits the savings equally between the three operating utilities.
c. First, lets see what the cost would be under a split-savings pricing policy if the interchange
agreements were made with transaccion 2-1 first, then transaccion 3-1.
Utility 1
Gen.
(MW)
Start
400
After tran 2-1 337.98
After tran 3-1 177.46
Transaction 2-1:

Utility 1
Cost
($/h)
21605.1
16369.64
6033.46

Saves utility 1
Costs utility 2

Utility 2
Gen.
(MW)
250
312.02
312.02

Utility 2
Cost
($/h)
6877.9
9744.44
9744.44

Saves utility 1
Costs utility 3

Utility 3
Cost
($/h)
8086.6
8086.6
15072.86

5,235.46 $
2,866.54 $

After splitting savings, utility 1 pays utility 2

Transaction 3-1:

Utility 3
Gen.
(MW)
350
350
510.53

2,866.54 + 1,184.46 = 4,051 $

10,336.18 $
6,986.26 $

After splitting savings, utility 1 pays utility 3

6,986.26 + 1,674.96 = 8,661.22 $

Summary of payments:
Utility 1 pays a net
Utility 2 receives
Utility 3 receives

12,712.22 $
4,051 $
8,661.22 $

Now let the transactions be costed assuming the same split savings pricing policy but with the
interchange agreements made with transaction 3-1 first, then transaction 2-1

Utility 1
Gen.
(MW)
Start
400
After tran 3-1 239.47
After tran 2-1 177.46
Transaction 3-1:

Utility 1
Cost
($/h)
21605.1
9476.93
6033.46

Saves utility 1
Costs utility 3

Utility 2
Gen.
(MW)
250
250
312.02

Utility 2
Cost
($/h)
6877.9
6877.9
9744.44

Saves utility 1
Costs utility 2

Utility 3
Cost
($/h)
8086.6
15072.86
15072.86

12,128.17 $
6,986.26 $

After splitting savings, utility 1 pays utility 2

Transaction 2-1:

Utility 3
Gen.
(MW)
350
510.53
510.53

6,986.26 + 2570.96 = 9,557.21 $

3,443.47 $
2,866.54 $

After splitting savings, utility 1 pays utility 3

2,866.54 + 288.47 = 3,155 $

Summary of payments:
Utility 1 pays a net
Utility 2 receives
Utility 3 receives

12,712.22 $
3,155 $
9,557.21 $

Except for utility 1, the payments for the interchanged power are different, depending on the order
in which the transactions were carried out. If transaction 2-1 were carried out first, utility 2 would be
selling power to utility 1 at a lower incremental cost than if transaction 3-1 were carried out first.
Obviously, it would be to a seller's (utility 2 in this case) advantage to sell when the buyer's (utility 1)
incremental cost is high.
When several two-party interchange transactions are made, the pricing must follow the proper
sequence. In this problem, the utility supplying the energy receives more than its incremental
production costs no matter which transaction is costed initially. The rate that the other two utilities pay
per MWh are different and depend on the order of evaluation. These differences may be summarized
as follows in terms of $/MWh.

1 pays
2 receives
3 receives

Cost Rates ($/MWh)

2-1 costed first 3-1 costed first
12712.22
12712.22
4051
3155
8661.22
9557.21

d. The optimal allocations savings based on the Shapley Value are:

Coalition utilities
Coalition
Independent
1-2
2-3
1-3
1-2-3

Savings
0
5235.46
0
10336.18
15571.64

C=

Shapley value

s1! ns !
n!

Utility 1
Coalition
1

Marginal Contribution
00=0

Weight
11! 31 ! 1
=
3!
3

1-2

5235.46 0 = 5235.46

1-3

10336.18 0 = 10336.18

1-2-3

15571.64 0 =15571.64

21! 32! 1
=
3!
6
1
6
1
3

1
1
1
1
Shapley value = 1= 0 5235.46 10336.18 15571.64
3
6
6
3

1=$ 9508.52/h
Utility 2
Coalition
2

Marginal Contribution
00=0

Weight
11! 31! 1
=
3!
3

2-1

5235.46 0 = 5235.46

2-3

2-1-3

15571.64 5235.46 =10336.18

21! 32! 1
=
3!
6
1
6
1
3

1
1
1
1
Shapley value = 2= 0 5235.46 0 10.336 .18
3
6
6
3
2=$ 4317.97/h

Utility 3
Coalition
3

Marginal Contribution
00=0

Weight
11! 31! 1
=
3!
3

3-1

10336.18 0 = 10336.18

3-2

00=0

3-1-2

15571.64 10336.18 =5235.46

21! 32! 1
=
3!
6
1
6
1
3

1
1
1
1
Shapley value = 3 = 0 10336.18 0 5235.46
3
6
6
3
1=$ 9508.52/ h

2=$ 4317.97/h

3 =$ 3467.85/ h

Problem 5
In this problem, three power systems have sent, their buy/sell offers to the broker. In the table that
follows, these are tabulated and the maximum pool savings possible is calculated
Utilities
Selling
Energy
3
3
3
3
2
3
3
2
3
2
3
Utilities
Buying
Energy
1
1
1
1
1
1
1
1

Incremental
Cost ($/MWh)
38.7
40.3
41.9
43.5
44.9
45.1
46.7
47.3
48.3
49.7
49.9
Decremental
Cost ($/MWh)
86.4
82.8
79.2
75.6
72
68.4
64.8
61.2

MWh
for Sale
20
20
20
20
20
20
20
20
20
20
20

Seller's Total
Increase in Cost ($)
774
806
838
870
898
902
934
946
966
994
998

MWh
Buyer's Total
for Purchase Decrease in Cost ($)
20
1728
20
1656
20
1584
20
1512
20
1440
20
1368
20
1296
20
1224

1
1
1

57.6
54
50.4

20
20
20

Net pool savings = $ 15048 $ 9926 = $ 5122

1152
1080
1008

The broker sets up transactions as shown in the following table

Transaction
3 sells 20 MWh to 1
3 sells 20 MWh to 1
3 sells 20 MWh to 1
3 sells 20 MWh to 1
2 sells 20 MWh to 1
3 sells 20 MWh to 1
3 sells 20 MWh to 1
2 sells 20 MWh to 1
3 sells 20 MWh to 1
2 sells 20 MWh to 1
3 sells 20 MWh to 1

Savings Computation
20 MWh (86.4 38.7) $/MWh =
20 MWh (82.8 40.3) $/MWh =
20 MWh (79.2 41.9) $/MWh =
20 MWh (75.6 43.5) $/MWh =
20 MWh (72 44.9) $/MWh
=
20 MWh (68.4 45.1) $/MWh =
20 MWh (64.8 46.7) $/MWh =
20 MWh (61.2 47.3) $/MWh =
20 MWh (57.6 48.3) $/MWh =
20 MWh (54 49.7) $/MWh
=
20 MWh (50.4 49.9) $/MWh =
Total

Total
Transaction
Savings ($)
954
850
746
642
542
466
362
278
186
86
10
5122

The rates and total payments are easily computed under the split-savings arrangement. These are
shown in the following table

Transaction
3 sells 20 MWh to 1
3 sells 20 MWh to 1
3 sells 20 MWh to 1
3 sells 20 MWh to 1
2 sells 20 MWh to 1
3 sells 20 MWh to 1
3 sells 20 MWh to 1
2 sells 20 MWh to 1
3 sells 20 MWh to 1
2 sells 20 MWh to 1
3 sells 20 MWh to 1

Price
($/MWh)
62.55
61.55
60.55
59.55
58.45
56.75
55.75
54.25
52.95
51.85
50.15
Total

=
=
=
=
=
=
=
=
=
=
=

Total
Costs ($)
1251
1231
1211
1191
1169
1135
1115
1085
1059
1037
1003
12487

Utility 3 receives $9196 from Utility 1 and Utility 2 receives $3291. Note that each participant
benefits: Utility 3 receives $2108 above its costs; Utility 2 receives $453 above its costs; and, Utility 1
saves $2561.
b. Considering a transmission constraint on line 1-3 of 60 MW: In this problem, three power systems
have sent, their buy/sell offers to the broker. In the table that follows, these are tabulated and the
maximum pool savings possible is calculated

Utilities
Selling
Energy
3
3
3
2
2
2
2
2
2
Utilities
Buying
Energy
1
1
1
1
1
1
1
1
1

Incremental
Cost ($/MWh)
38.7
40.3
41.9
44.9
47.3
49.7
52.1
54.5
56.9
Decremental
Cost ($/MWh)
86.4
82.8
79.2
75.6
72
68.4
64.8
61.2
57.6

MWh
for Sale
20
20
20
20
20
20
20
20
20

Seller's Total
Increase in Cost ($)
774
806
838
898
946
994
1042
1090
1138

MWh
Buyer's Total
for Purchase Decrease in Cost ($)
20
1728
20
1656
20
1584
20
1512
20
1440
20
1368
20
1296
20
1224
20
1152

Net pool savings = 12960 $ 8526 $ = 4434 $

The broker sets up transactions as shown in the following table

Transaction
3 sells 20 MWh to 1
3 sells 20 MWh to 1
3 sells 20 MWh to 1
2 sells 20 MWh to 1
2 sells 20 MWh to 1
2 sells 20 MWh to 1
2 sells 20 MWh to 1
2 sells 20 MWh to 1
2 sells 20 MWh to 1

Savings Computation
20 MWh (86.4 38.7) $/MWh =
20 MWh (82.8 40.3) $/MWh =
20 MWh (79.2 41.9) $/MWh =
20 MWh (75.6 44.9) $/MWh =
20 MWh (72 47.3) $/MWh
=
20 MWh (68.4 49.7) $/MWh =
20 MWh (64.8 52.1) $/MWh =
20 MWh (61.2 54.5) $/MWh =
20 MWh (57.6 56.9) $/MWh =
Total

Total
Transaction
Savings ($)
954
850
746
614
494
374
254
134
14
4434

The rates and total payments are easily computed under the split-savings arrangement. These are
shown in the following table
Price
($/MWh)
62.55
61.55
60.55
60.25
59.65
59.05
58.45
57.85
57.25
Total

Transaction
3 sells 20 MWh to 1
3 sells 20 MWh to 1
3 sells 20 MWh to 1
2 sells 20 MWh to 1
2 sells 20 MWh to 1
2 sells 20 MWh to 1
2 sells 20 MWh to 1
2 sells 20 MWh to 1
2 sells 20 MWh to 1

=
=
=
=
=
=
=
=
=

Total
Costs ($)
1251
1231
1211
1205
1193
1181
1169
1157
1045
10743

Utility 3 receives $3693 from Utility 1 and Utility 2 receives $7050. Note that each participant
benefits: Utility 3 receives $1275 above its costs; Utility 2 receives $942 above its costs; and, Utility 1
saves $2217
c. The system savings have been reduced.
d.The optimal allocations savings based on the Shapley Value are:
Coalition utilities
Coalition
Independent
1-2
2-3
1-3
1-2-3

Savings
0
906
0
4216
5122

C=

Shapley value

s1! ns !
n!

Utility 1
Coalition
1

Marginal Contribution
00=0

Weight
11! 31 ! 1
=
3!
3

1-2

906 0 = 906

1-3

4216 0 = 4216

1-2-3

5122 0 = 5122

21! 32! 1
=
3!
6
1
6
1
3

1
1
1
1
Shapley value = 1= 0 906 4216 5122
3
6
6
3
1=$ 2561 /h
Utility 2
Coalition
2

Marginal Contribution
00=0

Weight
11! 31 ! 1
=
3!
3

2-1

906 0 = 906

2-3

2-1-3

5122 906 =4216

21! 32! 1
=
3!
6
1
6
1
3

1
1
1
1
Shapley value = 2= 0 906 0 4216
3
6
6
3
2=$ 1707/ h
Utility 3
Coalition
3

Marginal Contribution
00=0

Weight
11! 31 ! 1
=
3!
3

3-1

4216 0 = 4216

3-2

00=0

3-1-2

5122 4216 = 906

21! 32! 1
=
3!
6
1
6
1
3

1
1
1
1
Shapley value = 3 = 0 4216 0 906
3
6
6
3
1=$ 2561 /h

2=$ 1707/ h

3 =$ 1004.66/h

Problem 6

PG j= PD k
j

PGA + PGB = 200

A42 B 27

=200
0.8
0.55
1.552.51.82 49.1=200
=$ 98.24 /MWh

PGA = 70.3 MW
PDX = 129.53 MW
Now considering an intertie capacity of 40 MW
For Area A:
A42
=175
0.8
A=$ 182/ MWh

PGA = 175
MW
PDX = 135 MW
For Area B:
B27
40=65
0.55
B27
40=65
0.55
B=$ 40.75 /MWh
PGB = 25 MW
PDY = 65 MW
Problem 7

PG j= PD k
j

PGA + PGB = PDX + PDY

3 502 =2502.86 629

=$ 104.85/ MWh
PGA = 264.55 MW
PDX = 145.5 MW

PGB = 209.7 MW
PDY = 329.13 MW

Now considering an intertie capacity of 70 MW

For Area A:
3 A50=250 A70
A=$ 92.5/ MWh

PGA = 227.5 MW
PDX = 157.5 MW
For Area B:
2 B 70=6292.86 B
B=$ 115.02/ MWh

PGB = 230.04 MW
PDY = 300.04 MW