IEEE TRANSACTIONS ON POWER SYSTEMS, VOL. 21, NO.

1, FEBRUARY 2006

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Impact on Real and Reactive Power Pricing in Open Power Market Using Unied Power Flow Controller
K. S. Verma and H. O. Gupta, Senior Member, IEEE
AbstractTransmission pricing is an important issue in view of increased deregulation. A nonlinear optimization problem has been formulated to maximize the social welfare in the open power market using a unied power ow controller (UPFC) in this paper. With a static point of view, congestion management installation of UPFC requires a two-step approach. First, the proper location of these devices in the network must be ascertained and then the settings of its control parameters optimized for the required objective. Nodal spot prices for both real and reactive powers have been computed using optimal power ow solutions, and the impact of UPFC on the spot pricing have been studied. The effectiveness of the proposed methods is demonstrated on a test system. Index TermsNodal pricing, optimal power ow (OPF), unied power ow controller (UPFC), UPFC location.

I. INTRODUCTION

N the present pace of power system restructuring, transmission systems are being required to provide increased power transfer capability and to accommodate a much wider range of possible generation patterns. Environmental, right-of-way, and cost problems are major hurdles for power transmission network expansion. Hence, there is an interest in better utilization of available power system capacities by installing new devices such as exible ac transmission systems (FACTS). FACTS devices can be an alternative to reduce the ows in heavily loaded lines, resulting in an increased loadability, low system loss, improved stability of the network, reduced cost of production, and fullled contractual requirement by controlling the power ows in the network. Power systems, all over world, have been forced to operate in almost their full capacities due to the environmental and/or economical constraints to build new generation centers and transmission lines. The amount of electric power that can be transmitted between two locations through a transmission network is limited by security constraints. Power ows should not be allowed to increase to a level where a random event could cause the network to collapse because angular instability, voltages instability, or cascaded outages. The system is said to be congested when such a limit is reached. Managing congestion to minimize the restrictions of the transmission network in the market of electrical energy has thus become the central activity of power system operators. The role of FACTS in the open power market

Manuscript received February 5, 2003; revised April 6, 2003. Paper no. TPWRS-00059-2003. K. S. Verma is with the Kamla Nehru Institute of Technology, Sultanpur, UP, India and also with the Indian Institute of Technology, Roorkee 247667, India (e-mail: ksvevdee@iitr.ernet.in). H. O. Gupta is with the Department of Electrical Engineering, Indian Institute of Technology, Roorkee 247667, India (e-mail: harifee@iitr.ernet.in). Digital Object Identier 10.1109/TPWRS.2005.857829

is to manage the congestion, enhancing security, reliability, increasing available capability, controlled ow of power, and other system performances. Congestion in a transmission system, whether vertically organized or unbundled, cannot be permitted except for a very short duration, for fear of cascade outages with uncontrolled loss of load. If there is no congestion, the placement of FACTS devices, from the static point of view, can be decided on the basis of reducing losses, but this approach is inadequate when congestion occurs. A method based on the real power ow performance index (PI) has been used in this paper for this purpose due to security and stability reasons. A method [7][9] for the suitable locations of unied power ow controller, with a static point of view, has been used in these papers for different objectives, based on the real power ow performance index sensitivity with respect to control parameters of the unied power ow controller (UPFC). In [12], a steady-state model of UPFC (power injection model) has been used and introduced in the minimum price dispatch algorithm. Optimization has been performed with the system operating constraints. Transmission pricing has been an important issue in the ongoing debate about power system restructuring and deregulation. The purpose of pricing is to recover cost of transmission and to encourage efcient use and investment. Limited efforts have been made to study the impact of UPFC on transmission charges. Optimal power ow (OPF)-based spot pricing is an important method. Choi et al. [13] presented a theory and simulation results of real-time pricing of real and reactive powers that maximize social benets. Lima et al. [14] considered the dynamic aspects of pricing and its impact on long-term expansion planning of both generation and transmission. In the same paper, FACTS devices have shown an ability to change the production cost and their impact on transmission charges. The effect of FACTS devices on transmission charge varies according to the pricing methodology adopted. FACTS devices had the ability to reduce the overall operating cost and their impact on transmission pricing. Srivastava and Verma [15] utilize locational-based pricing concepts and have suggested a nonlinear programming problem formulation to determine real and reactive power prices. However, they have taken thyrister-controlled series compensator (TCSC) and static var compensator (SVC) to see their impact on transmission pricing. Thus, attention is focused only on the UPFC in this paper. This paper presents a novel methodology to locate the UPFC for congestion management in the deregulated power sector and presents a nonlinear optimization problem formulation with UPFC to see the impact on transmission real and reactive spot pricing. The proposed algorithm has been demonstrated on a modied IEEE 30-bus test system.

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The power ow equations from bus- to bus- and from busto bus- can be written as

(2) (3) Active and reactive power ows in the line having UPFC can be written, with (1)(3), as

Fig. 1. Schematic diagram of UPFC.

(4) (5)

Fig. 2.

Equivalent circuit of UPFC.

(6) (7) From basic circuit theory, the injected equivalent circuit of Fig. 3 can be obtained. The injected active power at busand busand reactive powers ( and ) of a line having a UPFC are

II. UPFC MODEL The basic principles of operation of the UPFC are already well established in the literature [3][5]. The schematic representation of the UPFC is shown in Fig. 1. It consists of two voltage source converters and a dc circuit represented by the capacitor. Converter 1 is primarily used to provide the real power demand of converter 2 at the common dc link terminal from the ac power system. Converter 1 can also generate or absorb reactive power at its ac terminal, which is independent of the active power transfer to (or from) the dc terminal. Therefore, with proper control, it can also fulll the function of an independent advanced static VAR compensator providing reactive power compensation for the transmission line and thus executing indirect voltage regulation at the input terminal of the UPFC. Converter 2 is used to generate a voltage source at the fundamental frequency with variable amplitude and phase angle , which is added to the ac transmission line by the series-connected boosting transformer. The inverter output voltage injected in series with line can be used for direct voltage control, series compensation, phase shifter, and their combinations. This voltage source can internally generate or absorb all the reactive power required by the different type of controls applied and transfers active power at its dc terminal. The equivalent circuit of UPFC placed in line- connected between bus- and bus- is shown in Fig. 2. UPFC has three controllable parameters, namely, the magnitude and the angle and the magnitude of the current of inserted voltage . Based on the principle of UPFC and the vector diagram, the basic mathematical relations can be given as Arg Arg Arg and Arg Re

(8) (9) (10) (11)

III. LOCATION OF UPFC The severity of the system loading under normal and contingency cases can be described by a real power line ow performance index [16], as given in the following:

PI

(12)

(1)

where is the real power ow and is the rated cais the exponent, and a real nonnegapacity of linetive weighting coefcient that may be used to reect the imporis the total number of lines in the network. tance of the lines. Most of the work on contingency selection algorithms utilizes the second-order performance indices, which, in general, suffer from masking effects. The lack of discrimination, in which the performance index for a case with many small violations may be comparable in value to the index for a case with one huge

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, and can be obtained using (8) and (9), respectively, and are given by
Fig. 3. Injection model of UPFC.

violation, is known as the masking effect. The masking effect to some extent can be avoided by using higher order performance . However, in this paper, the value of the indices, that is, . It was found that the exponent has been taken as 2 and masking effect was removed with this value for the considered examples. The real power ow performance index gives a good measure of the system congestion during the normal operating condition. The real power ow PI sensitivity factors with respect to the control parameters of UPFC can be dened as PI PI PI PI sensitivity with respect to

(16)

(17) (18) (19) (20) (21)

PI sensitivity with respect to PI sensitivity with respect to The sensitivity factors , and can be obtained using (16)(21). The derivatives of real and reactive power with respect to the phase angle of UPFC are considered around zero, although the phase angle in UPFC can be control from 0 to 360 . The angle difference for both ends of the line are generally very small, and it is limited to 30 due to stability reasons. IV. REAL AND REACTIVE SPOT PRICING The objective of pricing policy is to maximize the benet of all the participants, that is, to maximize the consumers and producers surplus, subject to operational constraints. This is accomplished by setting the prices of real and reactive powers at each bus at a particular time equal to the marginal values of supplying and consuming real and reactive power at the same bus and at the same time, where the marginal values are determined by maximizing total surplus of utilities and consumers, subject to the operational constraints. Mathematically, the normal dispatch problem can be written as (22) where set of pool generator buses; set of pool load buses; active power of pool generator- ; bid price of pool generator- ; active power of pool load- ; bid price of pool load- . A. Operating Constraints

Using (12), the sensitivity of PI with respect to UPFC param( , and ) connected between bus- and buseter can be written as PI

(13)

can be represented in The real power ow in a lineterms of real power injections using dc power ow equations [16] where is slack bus, as for for (14)

where is the th element of matrix that relates line ow with power injections at the buses without UPFC, and is the number of buses in the system. Observe that line- , from bus- to bus- , is the line containing the UPFC, as illustrated in , therefore, is the addition ow, at bus- , in the line Fig. 3. containing the UPFC, due to the presence of the device. Using (13) and (14), the following relationship can be derived for for (15) The terms

1) Equality Constraints: Power ow equations corresponding to both real and reactive power balance equations are

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the equality constraints that can be written, for all the buses except buses and in which UPFC is connected, as

limits of reactive source generator- , respectively; mathematically it can be written as (30)

(23)

3) Voltage limit: This includes the upper limits on the bus voltage magnitude

and lower

(31) (24) For buses and , the equality constraints can be written as 4) Phase angle limits: The phase angle at each bus should be between lower and upper limits (32) These limits may vary, depending upon the problem under consideration. Imposing phase angle limits at load buses is another way of limiting the power ow in the transmission lines, and as for generator buses, this is done for stability reasons. 5) Line ow limits: These constraints represent the maximum power ow in a transmission line and are usually based on thermal and dynamic stability considerations. be the maximum active power ow in line- , Let respectively. The line ow limit can be written as (33) (27) 6) UPFC control parameter limits: The voltage magnitude and phase angle of series voltage of UPFC must lie within the limit. Mathematically, it can be written as (34) (35) Reactive power component of shunt current also be less than its rating should

(25)

(26)

(28) where real power injection at bus- ; reactive power injection at bus- ; real power generation at bus- ; reactive power generation at bus- ; real power load at bus- ; reactive power load at bus- ; voltage magnitude at bus- ; load angle at bus- ; th element of Y-bus matrix; number of reactive power sources in the system. 2) Inequality Constraints: 1) Power generation limit: This includes the upper and lower real power limit of generators (29) where and are the minimum and maximum limits of real power generation at bus- , respectively. and be 2) Reactive power generator limit: Let the maximum and minimum reactive power generation

(36) Mathematically, (22)(36) can be written as (37) subject to equality constraints inequality constraints where state vector, i.e., control parameters, viz. xed parameters, viz. , and ; . ; (38) (39)

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The Langrangian of this optimization problem is as follows:

TABLE I GENERATOR DATA

MC and MC are the marginal costs of real and reactive power at a buyer bus, while MC and MC are at the seller bus; the wheeling rate for real power is given by MC MC (44)

Similarly, the wheeling rate for reactive power is given by MC MC (45)

Similarly, wheeling charges for the purchase of real power and reactive power are given as WC WC (46) (47)

NAG Fortran Library E04UCF was used for solving the above OPF problem. VI. SIMULATION RESULTS The proposed method has been tested on a modied IEEE 30-bus system. Voltage magnitudes at load buses are kept within the range of 0.951.10. The prices bid by generators are given in Table I, where is in megawatts, and cents is a monetary unit that may be scaled by any arbitrary constant without affecting the results. The optimal generation schedule without line ow constraints was found to be G1:170.40 MW, G2:58.2 MW, and G3:55.4 MW. With this generation schedule, the sensitivities were calculated for each control parameter of UPFC placed in every line one at a time. The sensitivities of real power ow performance index with respect to UPFC control parameters are presented in and are preTable II. The highest negative sensitivities sented in bold type. The value of sensitivity will be zero as has very little effect on power ow. It can be seen from Table II that for the congestion management, the UPFC will be suitable either in line 21-22 if we consider controlling the inserted voltage magnitude of UPFC. Line 27-11 is suitable for control of the UPFC phase angle. The will not be as effective as the range congestion control with of control is limited. The phase angle control of UPFC can be utilized for congestion management. Line 1-2 will be the next choice after line 27-11, but the phase angle will be negative as the ow of power in this line should be reduced, which also can show that sensitivity is positive. The proposed method does not suggest the interaction of several UPFC devices placed in the system, as it requires an optimization tool for getting optimal control parameters of the device. However, this method is suitable for suggesting the candidate lines for UPFCs. Based on sensitivities, their placement

(40) where . are Lagrange

PI multipliers of respective constraints.

V. DETERMINATION OF SPOT PRICING The prices for active and reactive powers at bus- are the marginal costs associated with the corresponding load ow equations when the OPF (with and without FACTS devices) are solved as a nonlinear programming problem. At a particular time, real time of price of real power and that of reactive power, at bus- are given by (41) The spot prices at load buses will be (42) Similarly, the reactive power spot pricing at load bus will be (43)

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TABLE II SENSITIVITY C AND C

TABLE III OPTIMAL GENERATION SCHEDULE (MVA)

Fig. 4.

Real power spot prices (cents/megawatthour) at load buses.

can be ascertained in few areas. To see the interaction of different UPFCs, an iterative procedure can be adopted. The optimal dispatch, described in Section IV with UPFC in line-33, line-27, and line-11, taken one at a time, was obtained and presented in Table III. Table III also shows the optimal dispatch without UPFC devices (base case). However, the optimal value of the phase angle of UPFC placement in lines 33, 27, and , respectively. The placement 11 were 5.72, 5.729, and of UPFC in line-11 gives a lower pool generation price compared to other cases. The variation of optimal pool real power generation with each UPFC device is very small. The nodal real power and reactive power spot prices at load buses that were obtained directly from optimization algorithm (i.e., Lagrange multiplier corresponding to real and reactive power load ow equations) are shown in Figs. 4 and 5, respectively. From Fig. 4, it was observed that placement of the UPFC device gives a lower real power spot price for all the load buses. The generation cost as well as the

real power spot price is less when the UPFC is placed in line-11 compared to placing it in other lines. It is true for reactive power price also, as can be seen from Fig. 5. It shows the reactive power spot prices at load buses. These gures show that reactive prices are more effective than real power price. Prices at the load bus can be lower also if that particular load relieves the ow on the network. Also from the optimization theory, the Lagrange multipliers corresponding to the equality constraints may, in general, be either positive or negative. The Lagrange multipliers for the real power equations of the load ow are invariably positive; however, for reactive power, they may be either positive or negative. This paper has considered constant real and reactive power loads. However, a more accurate customer response can be modeled using generalized and practical load models. The placement of FACTS devices from a static point of view only has been considered. Dynamic consideration of these devices also can be explored. Both the real and reactive power spot prices can be analyzed as a combination of different price components. From Figs. 4 and 5, it is observed that the real and reactive power spot prices change drastically due to placement of the

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Fig. 5. Reactive power spot prices at load buses.

UPFC device in the line. It is seen that reactive power prices are much less than the real power prices. VII. CONCLUSION In this paper, a sensitivity-based approach has been used for nding suitable placement of these devices. Test results obtained on test systems show that new sensitivity factors could be effectively used for UPFC placement in response to required objectives. After selecting the suitable locations, a comprehensive economic objective has been considered that depends on its control parameters. In a congested system, the suitable locations of UPFC can be effectively decided based on the sensitivity facand . The placement of a UPFC also can be decided tors based on the total minimum cost as suggested by optimal power ow. The placement of a UPFC in a particular line effects the real and reactive power prices and minimizes the social benet. It can be concluded that by including FACTS devices in the OPF model, signicant reduction in real power loss, reactive power loss, generation cost, and congestion generally reduces the spot prices. ACKNOWLEDGMENT The authors would like to thank Dr. S. N. Singh of the Indian Institute of Technology, Kanpur, India, for fruitful discussions and suggestions. The rst author would like to thank the Director of KNIT Sultanpur for sponsoring him for his doctoral program under QIP at the Indian Institute of Technology, Roorkee, India. REFERENCES
[1] N. G. Hingorani, Flexible AC transmission, IEEE Spectr., vol. 30, no. 4, pp. 4045, Apr. 1993.

[2] L. Gyugyi, A unied power ow control concept for exible AC transmission systems, Proc. Inst. Elect. Eng., pt. C, vol. 39, no. 4, pp. 323331, Jul. 1992. [3] , A unied power ow controller concept for exible AC transmission systems, in Proc. 5th Int. Conf. AC DC Transmission, London, U.K., Sep. 1720, 1991, pp. 1926. [4] J. Y. Liu and Y. H. Song, Comparison studies of unied power ow controller with static var compensators and phase shifters, Elect. Mach. Power Syst., vol. 27, pp. 237251, 1999. [5] J. Y. Liu, Y. H. Song, and P. A. Mehta, Strategies for handling UPFC constraints in the steady state power ow and voltage control, IEEE Trans. Power Syst., vol. 15, no. 2, pp. 566571, May 2000. [6] X. Lambord and P. G. Thernond, Control of unied power ow controller: Comparison of methods on the basis of a detailed numerical model, IEEE Trans. Power Syst., vol. 12, no. 2, pp. 824830, May 1997. [7] K. S. Verma, S. N. Singh, and H. O. Gupta, Optimal location of UPFC for congestion management, Elect. Power Syst. Res., vol. 58, no. 2, pp. 8996, Jul. 2001. [8] , FACTS device location for enhancement of total transfer capability, in Proc. IEEE Power Eng. Soc. Winter Meeting, vol. 2, Columbus, OH, Jan. 28Feb. 1 2001, pp. 522527. , Location of UPFC for power systems security in deregulated en[9] vironment, in Proc. Int. Conf. EAIT-2001. Kharagpur, West Bengal, Dec. 2001, pp. 149154. , Enhancement of available transfer capability by the use of UPFC [10] in open power market, in Proc. NPSC, vol. II. Kharagpur, West Bengal, Dec. 2002, pp. 463467. [11] K. S. Verma, H. O. Gupta, and S. N. Singh, Power ow control using UPFC in open power market, in Proc. CIGRE Regional Meeting, New Delhi, India, Nov. 2001. [12] S. N. Singh, K. S. Verma, and H. O. Gupta, Optimal power ow control in open power market using unied power ow controller, in Proc. IEEE Power Eng. Soc. Summer Meeting, vol. 3, Vancouver, BC, Canada, Jul. 1519, 2001, pp. 16981703. [13] J. Y. Choi, S.-H. Rim, and J.-K. Park, Optimal real time pricing of real and reactive powers, IEEE Trans. Power Syst., vol. 3, no. 4, pp. 12261231, Nov. 1998. [14] J. W. Marangon Lima and E. J. de Oliveira, The long-term impact of transmission pricing, IEEE Trans. Power Syst., vol. 13, no. 4, pp. 15141520, Nov. 1998. [15] S. C. Srivastava and R. K. Verma, Impact of FACTS devices on transmission pricing in a de-regulated electricity market, in Proc. IEEE Int. Conf. Electric Utility Deregulation Restructuring Power Technologies, London, U.K., Apr. 2000, pp. 642648. [16] A. J. Wood and B. F. Wollenberg, Power Generation, Operation and Control. New York: Wiley, 1996. [17] R. S. Fang and A. K. David, Optimal dispatch under transmission contracts, IEEE Trans. Power Syst., vol. 14, no. 2, pp. 732737, May 1999.

K. S. Verma received the B.Tech. and M.Tech. degrees n electrical engineering from Kamla Nehru Institute of Technology (KNIT), Sultanpur, India, in 1987 and 1998, respectively. He is a faculty member in the Department of Electrical Engineering, KNIT. Presently, he is on leave and pursuing research work for his doctoral degree at the Indian Institute of Technology, Roorkee, India, under QIP, Government of India. His research interests include power system operation and control, FACTS, and power sector deregulation.

H. O. Gupta (M77SM03) was born in Agra, India. He received the B.E. degree in electrical engineering from the Government Engineering College, Jabalpur, India, the M.E. degree in systems engineering and operations research in 1975, and the Ph.D. degree in 1980 from the University of Roorkee, Roorkee, India. He visited McMaster University, Hamilton, ON, Canada, from 1981 to 1983 as a Postdoctoral Fellow. His research interests are in the area of computeraided design, reliability engineering, power network optimization, power transformers, and deregulation.