ANÁLISIS DE LOS DOCUMENTOS DE PLANEAMIENTO: CUESTIONES Y FASES

The Transco–based scheme

With the given demand and supply data, the market clearing model (5.11)-(5.12) is simulated using the non–linear programming tool GAMS/MINOS. The resultant DR quan- tities are then used for the next-step simulation—to calculate the out-of-market surpluses for Reco, Disco and Genco, respectively, by using (5.13)–(5.16).

The simulation here considers four different cases. Each corresponds to a certain level of the system load. Under these different loading levels, results of the market clearing and out–of–market calculation are given in Tables 5.7 and 5.8, respectively.

As expected, the social surplus is negative at 0.8 p.u. and 0.6 p.u. system loads. This is because the corresponding in-market total surpluses (45.8$ and 17.2$) are all outweighed by the out–of–market surpluses that are negative (−114.2$ and −73.4$). These results indicate that trading DR within the market, while benefiting every market participant (the Transco and customers), can be conflicted with some out-of-market parties as it causes financial losses incurred by them (e.g., Gencos).

It is interesting to observe that besides the Gencos, the Reco also suffers losses (−33.7$ and−85.5$) during these periods. This is because the spot prices at 0.8 p.u. and 0.6 p.u.

Numerical example

Table 5.7: Market clearing under the Transco-based scheme

System DR DR Customer Transco Total IM

loading quantity payment surplus surplus surplus

1.2 p.u 2.4 166.8 83.4 14.4 97.8

1 p.u. 1.8 114.3 57.2 8.5 65.7

0.8 p.u. 1.34 74.8 37.4 7.6 45.8

0.6 p.u. 0.77 30.8 15.4 1.8 17.2

Table 5.8: Out-of-market surpluses under the Transco-based scheme

System Disco Reco Genco Total OOM Social

loading surplus surplus loss surplus surplus

1.2 p.u 89.6 2298.3 2294.1 93.8 191.6

1 p.u. 68.7 453.8 513.9 8.6 74.3

0.8 p.u. 50.6 -33.7 130.5 -114.2 -69.2

0.6 p.u. 28.9 -85.5 16.8 -73.4 -56.2

are as low as 65$/MWh (see Fig. 5.8), which is far less than the retail prices (see Table 5.5). Therefore, the scheduled DR, which reduces electricity demand, also reduces the profit for the Reco from buying bulk electricity at a low spot price and reselling it to the customers at higher prices.

During the other periods (corresponding to 1 p.u. and 1.2 p.u. system loads), the spot price is spiky, meaning that only a small reduction in the electricity demand results in a large reduction in the price. Unlike those causing losses in the 0.6 p.u. and 0.8 p.u. periods, DR in the form of load curtailments under spiky spot prices eventually brings extra profits to the Reco. Such profits are as much as 453.8$ and 2298.3$ in Table 5.8, respectively.

However, while the Reco gains higher profits, Gencos experience higher losses. This is because when DR is scheduled, the Genco profits are automatically redistributed to the Reco through the reduction of spot prices. For example, during the 1.2 p.u. period, as the electricity demand reduces from 36MWh to 33.6MWh, the spot price reduces significantly. As a result, DR surplus to the Reco is 2298.3$, which mostly comes from the Genco (who are losing 2294.1$).

The above observations are commonly called in microeconomicsexternalities, in which actions (DR scheduling) taken by some players (Transco and customers) directly affect the well-being of other players [75]. Due to these externalities, costs and benefits derived from DR are allocated unfairly among players, in which some players pay nothing but gain more benefit than others who has to pay. There may even be some players who suffer losses caused by conflicted capacity that is scheduled by other players. These issues related to externalities are substantiated by the above results.

Table 5.9: Market clearing under the Reco–based scheme

System DR DR Customer Reco Total IM

loading quantity payment surplus surplus surplus

1.2 p.u 5.7 966.2 483.1 2779.2 3262.9

1 p.u. 2.6 243.6 121.8 319.6 441.4

0.8 p.u. 0.142 2.6 1.3 0.5 2.8

0.6 p.u. 0 0 0 0 0

Table 5.10:Out-of-market surpluses under the Reco–based scheme System Disco Transco Gencos Total OOM Social loading surplus surplus loss surplus surplus

1.2 p.u 210.5 400.8 3790.3 -3179.2 83.7

1 p.u. 95.6 168.4 792.3 -528.3 -86.9

0.8 p.u. 5.6 8.5 17.1 -3 -0.2

0.6 p.u. 0 0 0 0 0

The Reco–based scheme

To further illustrate the issues resulting from externalities, alternative DR-scheduling schemes including the Reco–based and the Disco-based are evaluated. However, since a Disco-based scheme is in general similar to the Transco–based, the study here focuses on assessing the Reco-based scheme only.

Under this scheme, the Reco has to pay for DR while both the Transco and Disco do not, rather they gain some reliability benefits for free. Since the Reco clears the DR market, it can derive the demand curve to be used for this market clearing. Such a curve would reflect a valuation in terms of how much this DR worth to the Reco. Mathematically, this curve is derived by taking partial derivatives of the DR benefit function (5.15), with respect to each quantity yg. The obtained demand curve then is substituted to (5.11)-

(5.12), to form a Reco–based market–clearing model. The evaluation results are shown in Tables 5.9 and 5.10, in comparision to the Transco–based scheme.

As can be seen, during periods of the 1.2 p.u. and 1 p.u. system loads, the Reco gains significant DR gross benefits (2779.2$+966.2$=3754.4$ and 319.6$+243.6$=563.2$, respectively). This is because when the Reco manages DR, it tends to increase this DR up to points (5.7MWh and 2.6MWh) where its gross benefits are optimal, which are higher than the benefits it gets (only 2298.3$ and 453.8$) when DR is managed by the Transco instead. However, Gencos at the same time suffer substantial losses since their profits are redistributed to the Reco through the spot price reduction. As a consequence, the Reco– based social surpluses during these hours are lower than those under the Transco scheme. Even the surplus at the 1 p.u. system load is negative (−86.9$).

Numerical example

During other periods, as electricity demand is relatively low (0.8 p.u. and 0.6 p.u.), the resultant spot price is relatively low (see Fig. 5.8). As discussed above, DR under this low price is not required because it will not bring any extra benefit to the Reco. Consequently, the Reco schedules very little or even no DR during the 0.6 p.u. and 0.8 p.u. loading periods. Although such scheduling causes no major loss to Gencos, it is conflicted with network operators as it reduces the reliability benefits compared with those under the Transco scheme given above.

Although the Transco-based scheme shows some advantages against the Reco-based, both schemes in our opinion are not efficient due to the common issue of externalities as observed in all the above results. Such externalities always lead to unfair situations where some players have to pay for DR that is freely used by other players, or where some players gain significant benefits while others lose money due to conflicted plans.