EE 5230: Journal Review

We can calculate locational marginal price(LMP) using AC optimal power

flow(ACOPF) and DC optimal power flow(DCOPF) dispatch model philosophies. Both
of these model have their own advantages and disadvantages. Due to fast and
simple solving model, DCOPF is popular than the ACOPF method. Even though
having high level of power flow accuracy, DCOPF has its own limitations in reactive
power control , marginal pricing etc. While using ACOPF model to obtain LMPs need
to be decomposed using additional techniques for settlement in the market.
The purpose of this paper is to design suitable rule for the energy reference
selection in ACOPF based on LMP calculation. In ACOPF model ,if the dummy slack
power is not defined to model network security then the dispatch solution and LMPs
are always independent of the choice of energy reference. While ,congestion
components of LMPs are strongly dependence on the energy reference. Due to that
reason ,very specific issue arises regarding reference selection since the financial
transmission rights (FTRs-which is known as a risk hedging instruments whose
primary function is to provide price guard to the forward contract against the LMP
volatility) are evaluated by the congestion components of LMPs. In order to avoid
above energy reference dispute ,a suitable rule has been design for making specific
reference selection in the traditional LMP decomposition. Which is nothing but the
revenue adequacy in the FTR settlement for optimization process.
After reviewing the journal paper, the conclusion that can be drawn is that objective
function should be base on risk hedging functionality of FTRs and the revenue
adequacy issue while defining the constraint set. Hence, it is attempted to get an
LMP decomposition result optimizing the FTR performance.
The rest of the paper is organized as follows: to begin with, the basic ACOPF model
for locational marginal pricing is briefly discussed in section 2. The interrelation
between the congestion components of locational prices relationship is obtained in
section 3. The proposed optimization framework for resolving the reference
selection dispute is then explained in section 4 along with all the necessary
mathematical equation with small numerical example to understand the
mathematics involved in proposed methodology.
The optimization problem that is ultimately to be solved is a simple quadratic
programming problem with one variable with having two constraints .The
effectiveness of the proposed methodology is verified through a modified IEEE 30
bus system. It is revealed from this work that there is no way to ensure the
revenue adequacy of FTRs in advance in the case of ACOPF based marginal loss
pricing.