Thesis Guide:Dr. Anoop Arya

Submitted By:Komal Nigam

132113106M.Tech (Power System)

Indian power market Deregulation Indian power market development trend Transmission pricing Bidding Bidding classifications Bidding in electricity market Market clearing price Literature review Outcomes of literature review Research objectives Timeline References

Present Power System- Heavily Relying on Fossil

Fuels- Generation follows load- Limited ICT use- Limited Competition

Future Power System- More use of RES, clean

coal, nuclear power- Load follows Generation- More ICT & Smart meter

use- More competition

Prior to the enactment of Electricity Act 2003 there was a

monopoly of government.

A single entity I.e. government was taking care of all

electricity business such as generation, transmission

and distribution.

Continued power shortages, poor operational

performance and precarious financial situation of SEBs.

5

GENCOSIPP

Generation+

Transmission+

Distribution

Consumer

SEB

After passing of Electricity Act 2003,the

competition came to the forefront, both

government and private companies have

jurisdiction over it.

De-licensing of thermal generation including

captive generation.

Non-discriminatory open access in transmission.

Deregulation comes into the picture

7

CGS GENCO IPP

TraderTraderDiscom

Consumer

Deregulation is the process of removing or reducing state regulations. It is

therefore opposite of regulation, which refers to the process of the

government regulating certain activities.

The basic idea of restructuring includes introducing competitive energy

markets, unbundling electricity services and opening access to the network.

The objective of restructuring is to provide better options for industrial

contributors and to introduce revolutions with improved quality service and

choice to the customers at economical prices

Energy prices are not regulated in these deregulated areas and consumers

are not forced to receive supply from their utility.

Deregulation allows competitive energy suppliers to enter the

markets

Deregulation gives consumers choice - the power of the buyer. A

deregulated market allows you to choose your commodity supplier.

Restructuring comprises different activities; changing existing

companies corporation, privatization and dissociation

Single buyers/sellers

Multi buyers/sellers

Spot trading

With the introduction of restructuring into the electric

power industry, the price of electricity has become the

focus of all activities in the power market.

The objective of transmission pricing is to recover all or

part of the existing and new cost of transmission system.

The pricing of the transmission service must meet the

following requirements:

Promote economic efficiency.

Compensate grid companies fairly for providing

transmission services.

Allocate transmission cost reasonably among all

transmission users.

Maintain the reliability of transmission grid.

EXAMPLE

◦ Let genenerator-1 has capacity of 100 MW with production

cost $75/MW per unit time. Demand is 100 MW. Bid of other

gen at the same bus is

What should be bid of gen-1?

Option-1: bid at 100 $/MW

◦ win all demand of 100 MW. The profit will be 100(100-75)= 2500

Option-2: bid at 120 $MW

◦ win 50 MW capacity. The profit will be 50(120-75)= 2250

This shows the option-1 is preferred.

If second block of other gen. is 131 $/MW. Profit at bid price of

130 will be 50(130-75) = 2750.

◦ Now this is preferred.

50 MW 101 $/MW

50 MW 121 $/MW

BIDDING STRATEGY IN ELECTRICITY MARKETS

Theoretically, in perfect electricity markets, suppliers should bid at or very

close to their marginal cost to maximize profit.

However, the electricity market is not perfectly competitive due to limited

number of producers, therefore, power suppliers may seek to benefit by bidding

a price higher than the marginal production cost.

When a supplier bids other than the marginal cost, to take advantages of

imperfect market to increase their profit, this behavior is called strategic

bidding.

The bidding strategy decision of an individual supplier can be affected by

demand variation, generator cost characteristic, rivals bidding behavior,

operating and regulatory constraints.

Each supplier developed bidding strategy to maximize their profit, considering

own costs and constraints, rivals' bidding behavior and market rules.

Transmission constraints restricts the flow of power from low cost node to high value nodes.

Since transmission network capacity is limited, it may happennecessary to select expensive bid to avoid transmissionoverloading. Therefore, constraints on the system will causedifferent prices at different nodes.

Revenue collected from the consumer will be more than themoney paid to the generators in uniform market clearing pricesystem.

The market based congestion management methods can becategorized as:

Locational marginal price

Zonal price

Market split

Counter flow re-dispatch

BIDDING IN CONSTRAINED NETWORK

BIDDING STRATEGIES FORMULATIONS

1. Deterministic formulation

• Uncertainty are not included

• No temporalities

• All rivals are clubbed together

2. Stochastic formulation

•Uncertainty of bid price of

rivals

•Uncertainty of demand

•Temporalities are considered

•Rivals’ are not clubbed

Bidding problem formulation depends upon the market model, type of bidding

protocol, auction mechanism and estimation technique of rivals’ bidding behavior.

Solution approaches

1. Conventional methods

2. Heuristic approaches

Bidding is an offer (often competitive) of setting a

price one is willing to pay for something or a

demand that something be done. A price offer is

called a bid.

Buying or selling of energy takes place in the form of bids

Bidding

• Agents submit bids (Quantity and cost) to either buy or sell energy.

• Independent System Operator (ISO) matches the bids

• Bids below MCP are accpeted

• Two types of payments for bids

i) Uniform pricingii) Pay as bid

Strategic bidding:Aim is to construct best optimal bid knowing their own costs, technical constraints and their expectation of rival and market behavior

[1] This paper reviews the changes brought about by the new act The Electricity Act 2003 and analyses whether the new act would be sufficient to transform the Indian power sector.

[2] this paper reviews about market clearing price and power dispatch of generators.

[3]in this paper discussed about the issues involved in introduction of competition in the power sector primarily through development of a market for bulk power.

[4] A brief literature survey of strategic bidding in electricity markets is made in this paper

[5]this paper provides an overviews of the status of competition in various segments of the power system.

[6] This paper analyses a comprehensive literature on the state of the art research of bidding strategies in restructured electric power market.

RESEARCH TOPIC PROBLEMS

M. Prabavathi & R. Gnanadass (2013)

Bidding strategies for Indian Restructured Power Market

MCP & contribution of generators but without any constraints.

S. Soleymani, A.M. Ranjbar, & A.R. Shirani

Strategic bidding of generating units in competitiveelectricity market with consideringtheir reliability

Used for simple networks.

Determination of MCP and contributions of generator from their bids having many generators and many loads with variable demands using double sided auction, considering the constraints also.

Deregulation introduces competition in electricity Power Market.

Private players comes into picture, advantageous for customers.

Bidding in Day-Ahead Electricity (DAM) Markets and Term Ahead Market(TAM) is to be analysed.

How the Power will dispatch of generators in the competitive environment.

•Review paper

work

•Publishing

DEC-JAN

•Simulation work

•Analysing

results

FEB-MAR•Final ppt

•Thesis

submission

APR-JUN

[1] Bhattacharyya, S.C., 2005. The Electricity Act 2003: will it transform the Indian power sector? Utilities Policy 13 (3) 260–27

[2] M.Prabavathi, R.Gnanadass “Bidding Strategies for Indian Restructured power Market” (ICCPCT-2013),IEEE transactions pp. 568-573.

[3]Anoop Singh “power sector reform in India: current issues and prospects”,Energy Policy 34 (2006) 2480-2490.

[4] A.K.David Fushuan Wen,” Strategic Bidding in Competitive Electricity Markets: a Literature Survey”, Proceedings of 2000 PES Summer Power Meeting, vol.4, pp.2168-2173, 2000

[5]Anoop Singh “Towards a competitive market for electricity and consumer choice in the Indian power sector”, Energy policy 38 (2010) 4196-4208.

[6] M. Prabavathi, R. Gnanadass “Energy bidding strategies for restructured electricity market” Electrical Power and Energy Systems 64 (2015) 956–966