An algorithm for implementing transmission rights in a competitive power industry

In this paper, an algorithm for evaluating the long-term (seasonal, annual) values of transmission rights is described. The algorithm is based on simulating the probable line flows ahead of time using probabilistic optimal power flow (POPF). An efficient Monte Carlo approach, which computes the value of transmission links and line-flow probability distributions based on a given load duration curve and public knowledge of power plant characteristics is developed by linearizing OPF solutions at different system load levels. This knowledge is used by a system provider to establish likely value of transmission rights characterized by different levels of firmness. If a system provider is to post this information publicly, system users could estimate the value of the transmission rights to themselves. The second part of the algorithm is intended to facilitate ISOs in deciding between not serving system users who own transmission rights of certain firmness and curtailing short-term transactions in case there is congestion. The developed algorithm facilitates efficient relief of network congestion in short-term operations without violating prior obligations in long-term transmission right markets.