Value-based Transmission Investment and Operations

Marija Ilic milic@ece.cmu.edu

Invited Panel, IEEE PES 2014

Washington DC

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]

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[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

Bus 1

Bus 2

PL = 100 MW

Marginal Cost = 30 $/MWh Marginal Cost =

10 $/MWh

• 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 = (MC2 – MC1) * Additional Power Flow

Bus 1 Bus 2

PL = 100 MW

Marginal Cost = 30 $/MWh

Marginal Cost = 10 $/MWh

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?

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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?

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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

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INVESTMENTS IN TCSC AND SHORT-RUN OPERATIONAL FLEXIBILITY What is the optimal investment in TCSC considering the value of short-run operational flexibility?

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Optimal Investment Model (Minimize Operational and

Investment Cost)

(DC Power Flow and

Thermal Line Constraints)

(Line Investment Min)

(Power Balance in System)

(Power Injection Min/Max)

(TCSC Investment Min/Max)

(TCSC Operational Range)

Optimality Conditions for Investments in TCSC:

Marginal Cost of

Investment

Cumulative Sum of

the Additional

Congestion Rent

Brought About by

TCSC

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Base Case Test System and Parameters

Technology Scaled and Annualized

Investment Cost

New Line Capacity $20 thousand per MW

New TCSC Capacity $20 million per p.u. flexible reactance

Load Profile:

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Results: Optimal Investments With and Without Wind

Case Optimal Investment Decision

Investment Cost

($ thousand)

Savings in Operational Cost ($ million)

(1) No Wind 22.5 MW of New Line Capacity at Line 2

450 1.6

(2) With Wind

0.0025 pu of Flexible Reactance at Line 1

50 0.12

S

S

COSTG1=

$100/MWh

COSTG2=

$300/MWh

Xbase,1= j0.01 pu

Kbase,1=150MW

S

COSTG3=

$400/MWh

Lower Load

Xbase,2= j0.02 pu

Kbase,2=122.5MW

Xbase,2= j0.03 pu

Kbase,2=100MW

Higher Load

Line 1 Line 2

Line 3

COSTG1=

$100/MWh

S

S

COSTG2=

$300/MWh

Xbase,1= j0.01 pu

Kbase,1=150MW

S

COSTG3=

$400/MWh

Lower Load

Xbase,2= j0.02 pu

Kbase,2=100MW

Xbase,2= j0.03 pu

Kbase,2=100MW

Higher

Load

Line 1

Line 2

Line 3

No wind: With wind:

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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

4.6 MW of New Line Capacity at Line 2

92 6.4

(c) New TCSC/Line Capacity

0.0025 pu of Flexible Reactance at Line 1

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

Policy question: Should we redefine what it means to “relieve

congestion”? 22

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”?

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