Value-based Transmission Investment and Operations Marija Ilic milic@ece.cmu.edu Invited Panel, IEEE PES 2014 Washington DC
2 Outline The evolving role of on-line T&D management Basic definition of an optimal grid Valuing transmission value an example [1] Valuing flexible transmission in systems with intermittent resources [2] [1] Yoon, Y. T., "Electric Power Network Economics: Designing Principles for a For-Profit Independent Transmission Company and Underlying Architectures for Reliability, PhD thesis, June 2001, EECS, MIT (thesis advisor: M. Ilic) [2] C. Tee and M. Ilic, "Optimal Investment Decisions in Transmission Expansion," in Proceedings of the 44th North American Power Symposium, Urbana-Champaign, 2012.
The evolving role of on-line T&D management T&D as the enabler of T&D users (generation and demand) needs Time-varying needs require dynamic adjustments of T&D resources to maximize the ATC for least constraining delivery Examples of thermally- and voltage-limited ATC delivery (steady state; non-time critical congestion); key role of T&D grid optimization Examples of small signal- and transient stability-limited ATC (dynamic; time critical); key role of automation GROWING ROLE OF ON-LINE INFORMATION PROCESSING
Optimal grid for congestion relief Hard to design T&D grid ``optimally because conditions vary; need to rely on T&D management to optimize use of existing asset capacity ``optimal grid any grid design break-even point between the incremental capital cost and annual cumulative cost of unserved/expensive power delivery Becoming possible to utilize T&D assets more ``optimally ; new technologies provide shorter-term solutions/lower risks than large capital investments; The challenge framework to use new technologies; hardware limits (thermal) and systems limits (voltage, stability) can be co-optimized
Transmission Congestion Marginal Cost = 10 $/MWh Marginal Cost = 30 $/MWh P L = 100 MW Bus 1 Bus 2 Some Causes: Thermal limit of the line Voltage drop in the line
Causes of Transmission Congestion: Thermal Limits of Lines Determined by the conductor s material properties and the weather The higher the voltage, the greater the thermal limit If exceeded, can harm line Voltage (kv) Rating (MW) With DLRs 230 400 420 345 1200 1270 500 2600 2550 765 5400 5800 1100 24000 24500 [1]
Short-term value of relieving congestion Reliability Economic Value Value of New Transmission Capacity = (MC 2 MC 1 ) * Additional Power Flow Bus 1 Bus 2 Marginal Cost = 30 $/MWh Marginal Cost = 10 $/MWh P L = 100 MW Transmission Limit After Upgrade/ON-LINE DLR Transmission Limit Before Upgrade
Optimal Grid for Congestion Relief Value vs Cost
Summary of Charges In Millions In 100,000
Motivation for valuing flexible transmission in systems with intermittent resources Increased variability and intermittency in the power system due to: Renewable energy integration Distributed generation and load resources Greater variety of technologies that can supplement conventional AC transmission lines: Flexible AC Transmission System Devices (FACTS) Controllable DC Lines How do we value the flexibility provided by flexible transmission devices in making investment decisions? 15
Flexibility in Transmission Operational Flexibility: Is the operational capability of the system flexible enough to efficiently and effectively manage a variety of short-run system conditions and uncertainties? Investment Flexibility Is the long-run investment plan for the system flexible enough to efficiently adapt to changes in long-run system conditions and forecasts? Institutional Flexibility Is the regulatory and market framework flexible enough to accommodate and incentivize a wide variety of currently available and future technology? 16
Overview of Case Studies Two key questions answered: What is the optimal investment in flexible transmission devices considering the value of short-run operational flexibility? What is the value of long-run investment flexibility that can be brought about by flexible transmission devices? General framework demonstrated using simple 3-bus examples Technology considered: Thyristor-Controlled Series Compensator (TCSC) Control real power flow in system by changing reactance in the line Better utilize existing transmission capacity Case studies demonstrates: Value of TCSC in providing short-run operational flexibility and long-run investment flexibility 17
18 INVESTMENTS IN TCSC AND SHORT- RUN OPERATIONAL FLEXIBILITY What is the optimal investment in TCSC considering the value of shortrun operational flexibility?
Optimal Investment Model (Minimize Operational and Investment Cost) (DC Power Flow and Thermal Line Constraints) (Power Balance in System) (Power Injection Min/Max) (TCSC Operational Range) (TCSC Investment Min/Max) (Line Investment Min) Optimality Conditions for Investments in TCSC: Marginal Cost of Investment 19 Cumulative Sum of the Additional Congestion Rent Brought About by TCSC
Base Case Test System and Parameters Load Profile: Technology New Line Capacity New TCSC Capacity Scaled and Annualized Investment Cost $20 thousand per MW $20 million per p.u. flexible reactance 20
S S Results: Optimal Investments With and No wind: COST G1 = $100/MWh Line 1 Line 2 X base,1 = j0.01 pu K base,1 =150MW Without Wind X base,2 = j0.02 pu K base,2 =122.5MW With wind: Line 1 X base,1 = j0.01 pu K base,1 =150MW COST G1 = $100/MWh Line 2 X base,2 = j0.02 pu K base,2 =100MW COST G2 = $300/MWh 21 Case Optimal Investment Decision (1) No Wind 22.5 MW of New Line Capacity at Line 2 (2) With Wind S Lower Load Line 3 X base,2 = j0.03 pu K base,2 =100MW S Higher Load COST G3 = $400/MWh 0.0025 pu of Flexible Reactance at Line 1 COST G2 = $300/MWh S Lower Load Investment Cost ($ thousand) Line 3 X base,2 = j0.03 pu K base,2 =100MW Higher Load S Savings in Operational Cost ($ million) 450 1.6 50 0.12 COST G3 = $400/MWh
Results: Different Investment Scenarios with Wind Scenarios Optimal Investment Decision Investment Cost ($ thousand) Operational Cost ($ million) (a) No Investment - - 6.5 (b) New Line Capacity (c) New TCSC/Line Capacity 4.6 MW of New Line Capacity at Line 2 0.0025 pu of Flexible Reactance at Line 1 92 6.4 50 6.3 Scenarios Percentage of Time Congested (%) Line 1 Line 2 Line 3 (a) No Investment 1.3 24 0 (b) New Line Capacity 3.7 0 0 (c) New TCSC/Line Capacity 17 25 0 22 Policy question: Should we redefine what it means to relieve congestion?
Conclusion and Future Work Possible to have a general framework to evaluate how flexible transmission devices add value to a system particularly in system with high renewable resources Future work: What kind of tools do we need to apply proposed methods to larger system and models with stochasticity? Decomposition approaches, dynamic programming with heuristics, Markov modeling etc. How do we develop institutional flexibility? Market and regulatory design Centralized vs decentralized planning approaches Multi-time scale contracts for distributed risk management What do we really mean when we want to relieve congestion? 23