Generation expansion planning in electricity market considering uncertainty in load demand and presence of strategic GENCOs

This paper presents a new framework to study the generation capacity expansion in a multi-stage horizon in the presence of strategic generation companies (GENCOs). The proposed three-level model is a pool-based network-constrained electricity market that is presented under uncertainty in the predicted load demand modeled by the discrete Markov model. The first level includes decisions related to investment aimed to maximize the total profit of all GENCOs in the planning horizon, while the second level entails decisions related to investment aimed at maximizing the total profit of each GENCO. The third level consists of maximizing social welfare where the power market is cleared. The three-level optimization problem is converted to a one-level problem through an auxiliary mixed integer linear programming (MILP) using primal–dual transformation and Karush–Kuhn–Tucker (KKT) conditions. The efficiency of the proposed framework is examined on MAZANDARAN regional electric company (MREC) transmission network – a part of the Iranian interconnected power system. Simulation results confirm that the proposed framework could be a useful tool for analyzing the behaviour of investment in electricity markets in the presence of strategic GENCOs

Oligopolistic and oligopsonistic bilateral electricity market modeling using hierarchical conjectural variation equilibrium method

This thesis was submitted for the degree of Doctor of Philosophy and awarded by Brunel UniversityAn electricity market is very complex and different in its nature, when compared to other commodity markets. The introduction of competition and restructuring in global electricity markets brought more complexity and major changes in terms of governance, ownership and technical and market operations. In a liberalized electricity market, all market participants are responsible for their own decisions; therefore, all the participants are trying to make profit by participating in electricity trading. There are different types of electricity market, and in this research a bilateral electricity market has been specifically considered. This thesis not only contributes with regard to the reviewing UK electricity market as an example of a bilateral electricity market with more than 97% of long-term bilateral trading, but also proposes a dual aspect point of view with regard to the bilateral electricity market by splitting the generation and supply sides of the wholesale market. This research aims at maximizing the market participants’ profits and finds the equilibrium point of the bilateral market; hence, various methods such as equilibrium models have been reviewed with regard to management of the risks (e.g. technical and financial risks) of participating in the electricity market. This research proposes a novel Conjectural Variation Equilibrium (CVE) model for bilateral electricity markets, to reduce the market participants’ exposure to risks and maximize the profits. Hence, generation companies’ behaviors and strategies in an imperfect bilateral market environment, oligopoly, have been investigated by applying the CVE method. By looking at the bilateral market from an alternative aspect, the supply companies’ behaviors in an oligopsony environment have also been taken into consideration. At the final stage of this research, the ‘matching’ of both quantity and price between oligopolistic and oligopsonistic markets has been obtained through a novel-coordinating algorithm that includes CVE model iterations of both markets. Such matching can be achieved by adopting a hierarchical optimization approach, using the Matlab Patternsearch optimization algorithm, which acts as a virtual broker to find the equilibrium point of both markets. Index Terms-- Bilateral electricity market, Oligopolistic market, Oligopsonistic market, Conjectural Variation Equilibrium method, Patternsearch optimization, Game theory, Hierarchical optimization metho

Building and investigating generators' bidding strategies in an electricity market

In a deregulated electricity market environment, Generation Companies (GENCOs) compete with each other in the market through spot energy trading, bilateral contracts and other financial instruments. For a GENCO, risk management is among the most important tasks. At the same time, how to maximise its profit in the electricity market is the primary objective of its operations and strategic planning. Therefore, to achieve the best risk-return trade-off, a GENCO needs to determine how to allocate its assets. This problem is also called portfolio optimization. This dissertation presents advanced techniques for generator strategic bidding, portfolio optimization, risk assessment, and a framework for system adequacy optimisation and control in an electricity market environment. Most of the generator bidding related problems can be regarded as complex optimisation problems. In this dissertation, detailed discussions of optimisation methods are given and a number of approaches are proposed based on heuristic global optimisation algorithms for optimisation purposes. The increased level of uncertainty in an electricity market can result in higher risk for market participants, especially GENCOs, and contribute significantly to the drivers for appropriate bidding and risk management tasks for GENCOs in the market. Accordingly, how to build an optimal bidding strategy considering market uncertainty is a fundamental task for GENCOs. A framework of optimal bidding strategy is developed out of this research. To further enhance the effectiveness of the optimal bidding framework; a Support Vector Machine (SVM) based method is developed to handle the incomplete information of other generators in the market, and therefore form a reliable basis for a particular GENCO to build an optimal bidding strategy. A portfolio optimisation model is proposed to maximise the return and minimise the risk of a GENCO by optimally allocating the GENCO's assets among different markets, namely spot market and financial market. A new market pnce forecasting framework is given In this dissertation as an indispensable part of the overall research topic. It further enhances the bidding and portfolio selection methods by providing more reliable market price information and therefore concludes a rather comprehensive package for GENCO risk management in a market environment. A detailed risk assessment method is presented to further the price modelling work and cover the associated risk management practices in an electricity market. In addition to the issues stemmed from the individual GENCO, issues from an electricity market should also be considered in order to draw a whole picture of a GENCO's risk management. In summary, the contributions of this thesis include: 1) a framework of GENCO strategic bidding considering market uncertainty and incomplete information from rivals; 2) a portfolio optimisation model achieving best risk-return trade-off; 3) a FIA based MCP forecasting method; and 4) a risk assessment method and portfolio evaluation framework quantifying market risk exposure; through out the research, real market data and structure from the Australian NEM are used to validate the methods. This research has led to a number of publications in book chapters, journals and refereed conference proceedings

Sustainable generation mix as a reference in effective design of electricity market structures and rules

EThOS - Electronic Theses Online ServiceGBUnited Kingdo

Towards Structuring Smart Grid: Energy Scheduling, Parking Lot Allocation, and Charging Management

Nowadays, the conventional power systems are being restructured and changed into smart grids to improve their reliability and efficiency, which brings about better social, economic, and environmental benefits. To build a smart grid, energy scheduling, energy management, parking lot allocation, and charging management of plug-in electric vehicles (PEVs) are important subjects that must be considered. Accordingly, in this dissertation, three problems in structuring a smart grid are investigated. The first problem investigates energy scheduling of smart homes (SHs) to minimize daily energy consumption cost. The challenges of the problem include modeling the technical and economic constraints of the sources and dealing with the variability and uncertainties concerned with the power of the photovoltaic (PV) panels that make the problem a mixed-integer nonlinear programming (MINLP), dynamic (time-varying), and stochastic optimization problem. In order to handle the variability and uncertainties of power of PV panels, we propose a multi-time scale stochastic model predictive control (MPC). We use multi-time scale approach in the stochastic MPC to simultaneously have vast vision for the optimization time horizon and precise resolution for the problem variables. In addition, a combination of genetic algorithm (GA) and linear programming (GA-LP) is applied as the optimization tool. Further, we propose cooperative distributed energy scheduling to enable SHs to share their energy resources in a distributed way. The simulation results demonstrate remarkable cost saving due to cooperation of SHs with one another and the effectiveness of multi-time scale MPC over single-time scale MPC. Compared to the previous studies, this work is the first study that proposes cooperative distributed energy scheduling for SHs and applies multi-time scale optimization. In the second problem, the price-based energy management of SHs for maximizing the daily profit of GENCO is investigated. The goal of GENCO is to design an optimal energy management scheme (optimal prices of electricity) that will maximize its daily profit based on the demand of active customers (SHs) that try to minimize their daily operation cost. In this study, a scenario-based stochastic approach is applied in the energy scheduling problem of each SH to address the variability and uncertainty issues of PV panels. Also, a combination of genetic algorithm (GA) and linear programming (GA-LP) is applied as the optimization tool for the energy scheduling problem of a SH. Moreover, Lambda-Iteration Economic Dispatch and GA approaches are applied to solve the generation scheduling and unit commitment (UC) problems of the GENCO, respectively. The numerical study shows the potential benefit of energy management for both GENCO and SH. Moreover, it is proven that the GENCO needs to implement the optimal scheme of energy management; otherwise, it will not be effective. Compared to the previous studies, the presented study in this paper is the first study that considers the interaction between a GENCO and SHs through the price-controlled energy management to maximize the daily profit of the GENCO and minimize the operation cost of each SH. In the third problem, traffic and grid-based parking lots allocation and charging management of PEVs is investigated from a DISCO’s and a GENCO’s viewpoints. Herein, the DISCO allocates the parking lots to each electrical feeder to minimize the overall cost of planning problem over the planning time horizon (30 years) and the GENCO manages the charging time of PEVs to maximize its daily profit by deferring the most expensive and pollutant generation units. In both planning and operation problems, the driving patterns of the PEVs’ drivers and their reaction respect to the value of incentive (discount on charging fee) and the average daily distance from the parking lot are modeled. The optimization problems of each DISCO and GENCO are solved applying quantum-inspired simulated annealing (SA) algorithm (QSA algorithm) and genetic algorithm (GA), respectively. We demonstrate that the behavioral model of drivers and their driving patterns can remarkably affect the outcomes of planning and operation problems. We show that optimal allocation of parking lots can minimize every DISCO’s planning cost and increase the GENCO’s daily profit. Compared to the previous works, the presented study in this paper is the first study that investigates the optimal parking lot placement problem (from every DISCO’s view point) and the problem of optimal charging management of PEVs (from a GENCO’s point of view) considering the characteristics of electrical distribution network, driving pattern of PEVs, and the behavior of drivers respect to value of introduced incentive and their daily distance from the suggested parking lots. In our future work, we will develop a more efficient smart grid. Specifically, we will investigate the effects of inaccessibility of SHs to the grid and disconnection of SHs in the first problem, model the reaction of other end users (in addition to SHs) based on the price elasticity of demand and their social welfare in the second problem, and propose methods for energy management of end users (in addition to charging management of PEVs) and model the load of end users in the third problem

Modelling the transition to a low-carbon energy supply

PhD ThesisA transition to a low-carbon electricity supply is crucial to limit the impacts of climate change. Reducing carbon emissions could help prevent the world from reaching a tipping point, where runaway emissions are likely. Runaway emissions could lead to extremes in weather conditions around the world - especially in problematic regions unable to cope with these conditions. However, the movement to a low-carbon energy supply can not happen instantaneously due to the existing fossil-fuel infrastructure and the requirement to maintain a reliable energy supply. Therefore, a low-carbon transition is required, however, the decisions various stakeholders should make over the coming decades to reduce these carbon emissions are not obvious. This is due to many long-term uncertainties, such as electricity, fuel and generation costs, human behaviour and the size of electricity demand. A well choreographed low-carbon transition is, therefore, required between all of the heterogenous actors in the system, as opposed to changing the behaviour of a single, centralised actor. The objective of this thesis is to create a novel, open-source agent-based model to better understand the manner in which the whole electricity market reacts to different factors using state-of-the-art machine learning and artificial intelligence methods. In contrast to other works, this thesis looks at both the long-term and short-term impact that different behaviours have on the electricity market by using these state-of-the-art methods. Specifically, we investigate the following applications: 1. Predictions are made to predict electricity demand in the short-term. We model the impact that poor predictions have on investments in electricity generators and utilisation over the long-term. We find that poor short-term predictions lead to a higher proportion of coal, gas, and nuclear power plants. 2. We devise a long-term carbon tax for the United Kingdom using a genetic algorithm approach. We find multiple strategies that can minimise both long-term carbon emissions and electricity cost. 3. Oligopolies can have a detrimental effect on an electricity market by raising electricity prices without an increase in benefit to users. Reinforcement learning can be used to devise intelligent bidding strategies which are based upon forecasts and predictions of other agent behaviour to maximise revenues. These behaviours can not be modelled through traditional rule-based algorithms. We use reinforcement learning to model strategic bidding into the electricity market, and find ways to limit the impact of this strategic bidding through a market cap. We find that introducing a market cap can significantly reduce the ability for oligopolies to manipulate the market. These studies require a number of core challenges to be addressed to ensure our agent-based model, ElecSim, is fit for purpose. These are: 1. Development of the ElecSim model, where the replication of the pertinent features of the electricity market was required. For example, generation company investment behaviour, electricity market design and temporal granularity. We find that the temporal granularity of the model has a large impact on accuracy of the model, but with suitably chosen representative days calibration is possible to accurately model a time period. 2. The complexity of a model increases with the replication of increasing market features. Therefore, optimisation of the code was required to maintain computational tractability, to allow for multiple scenario runs. This enabled us to run multiple iterations to train different machine learning techniques. 3. Once the model has been developed, its long-term behaviour must be verified to ensure accuracy. In this work, cross-validation was used to both validate and calibrate ElecSim. We are able to accurately model a historic period observed in the real-world with this approach 4. To ensure that the salient parameters are found, a sensitivity analysis was run. In addition, various example scenarios were generated to show the behaviour of the model. We find that the input parameters, such as the cost of capital have a disproportionate effect on the long-term electricity mix. The findings outlined previously demonstrate the ability for artificial intelligence, machine learning and agent-based models to perform complex analyses in an uncertain system. We find that solely focusing on the accuracy of machine learning techniques, for instance, misses out on a significant amount research potential. We instead argue, that by further developing these research themes, we are able to better understand the electricity market system of the United Kingdom