A framework for congestion management analysis

In this dissertation, we construct an analytical framework to solve problems arising in transmission congestion management and describe its application in the analysis and design of effective congestion management schemes. Congestion has widespread impact on the operation of competitive electricity markets. Of the various congestion management schemes, the locational marginal prices (LMPs)-based scheme have become the most widely used. The LMPs are used as the economic signals to allocate the limited transmission services and compute the associated pricing. Financial transmission rights (FTR) are used to protect transmission customers from exposure to the uncertainties of the congestion prices. As such, the congestion management problem involves complex interactions between the three elements of electricity markets—the commodity market, the physical transmission network, and the financial markets for FTR. An appropriate representation of these elements and their interactions is important for congestion analysis. In this dissertation, we construct a framework for this purpose. We study the key characteristics of the three elements and embed appropriate models into three layers. The physical network layer contains the model of the transmission network. The model for the day-ahead market constitutes the commodity market layer. The financial market layer represents the FTR markets. We construct appropriate information flows between these three layers to represent their interactions. Using the information flows, we introduce a new tool for the provision of nondiscriminatory transmission services to both the bilateral transactions and the pool players. This new tool offers a more realistic representation of the social welfare and results in the more efficient utilization of the network than the previously developed scheduling tools. We illustrate the capability of the framework with several application examples. We use the framework to quantify the substitutability of a generation resource addition and a transmission transfer capability enhancement for congestion relief. We also apply the framework to the study of the revenue adequacy for the FTR issuer and the design of secondary FTR markets with added liquidity. The extension of the framework for applications to issues over longer time horizon is also discussed. Extensive simulation results are included to support the analytical results.