A mathematical structure for the assessment of transmission system augmentation in the Australian National Electricity Market

N. Hosseinzadeh, M. R. Hesamzadeh, D. R. Biggar

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Abstract

It is possible to distinguish three types of benefits from a transmission network augmentation: the benefits of more efficient dispatch (the "efficiency benefit"), the benefits from enhanced system reliability (the "reliability benefit") and the benefits of a reduction in market power (the "competition benefit"). In the Australian National Electricity Market, NEM, the "competition benefit" of additional transmission capacity has not, in practice, been explicitly assessed. In the future, however, it is possible that generator market power in some markets will increase. Consequently, it is timely and important to develop a workable mechanism to model and calculate the competition benefit of additional transmission capacity within the current NEM rules. In this paper, we propose a new mathematical structure for market-based augmentation of the transmission system, which can capture both the efficiency benefit and competition benefit of the transmission capacity. The Nash solution concept is employed to model the price-quantity game among Generating Companies, GenCos. The multiple Nash equilibria of the game are located by reformulating the Nash solution concept as an optimisation problem. The "worst" Nash equilibrium is used to assess the competition benefit of the transmission augmentation. The worst Nash equilibrium is the equilibrium which maximises the social cost, i.e. the sum of total generation cost and the total value of unserved energy. Thorough analysis of the modified Garver's example system is presented to clearly highlight the implications of the derived mathematical structure from different perspectives.

Original languageEnglish
Title of host publication43rd International Conference on Large High Voltage Electric Systems 2010, CIGRE 2010
Publication statusPublished - 2010
Event43rd International Conference on Large High Voltage Electric Systems 2010, CIGRE 2010 - Paris, France
Duration: Aug 22 2010Aug 27 2010

Other

Other43rd International Conference on Large High Voltage Electric Systems 2010, CIGRE 2010
CountryFrance
CityParis
Period8/22/108/27/10

Fingerprint

Electric power transmission networks
Costs
Power markets
Industry

Keywords

  • Competition benefit
  • Economic-based transmission augmentation
  • Game theory
  • Optimisation
  • Power system planning

ASJC Scopus subject areas

  • Electrical and Electronic Engineering

Cite this

Hosseinzadeh, N., Hesamzadeh, M. R., & Biggar, D. R. (2010). A mathematical structure for the assessment of transmission system augmentation in the Australian National Electricity Market. In 43rd International Conference on Large High Voltage Electric Systems 2010, CIGRE 2010

A mathematical structure for the assessment of transmission system augmentation in the Australian National Electricity Market. / Hosseinzadeh, N.; Hesamzadeh, M. R.; Biggar, D. R.

43rd International Conference on Large High Voltage Electric Systems 2010, CIGRE 2010. 2010.

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Hosseinzadeh, N, Hesamzadeh, MR & Biggar, DR 2010, A mathematical structure for the assessment of transmission system augmentation in the Australian National Electricity Market. in 43rd International Conference on Large High Voltage Electric Systems 2010, CIGRE 2010. 43rd International Conference on Large High Voltage Electric Systems 2010, CIGRE 2010, Paris, France, 8/22/10.
Hosseinzadeh N, Hesamzadeh MR, Biggar DR. A mathematical structure for the assessment of transmission system augmentation in the Australian National Electricity Market. In 43rd International Conference on Large High Voltage Electric Systems 2010, CIGRE 2010. 2010
Hosseinzadeh, N. ; Hesamzadeh, M. R. ; Biggar, D. R. / A mathematical structure for the assessment of transmission system augmentation in the Australian National Electricity Market. 43rd International Conference on Large High Voltage Electric Systems 2010, CIGRE 2010. 2010.
@inproceedings{72470561f6f14db285d2d8d6bc010f3c,
title = "A mathematical structure for the assessment of transmission system augmentation in the Australian National Electricity Market",
abstract = "It is possible to distinguish three types of benefits from a transmission network augmentation: the benefits of more efficient dispatch (the {"}efficiency benefit{"}), the benefits from enhanced system reliability (the {"}reliability benefit{"}) and the benefits of a reduction in market power (the {"}competition benefit{"}). In the Australian National Electricity Market, NEM, the {"}competition benefit{"} of additional transmission capacity has not, in practice, been explicitly assessed. In the future, however, it is possible that generator market power in some markets will increase. Consequently, it is timely and important to develop a workable mechanism to model and calculate the competition benefit of additional transmission capacity within the current NEM rules. In this paper, we propose a new mathematical structure for market-based augmentation of the transmission system, which can capture both the efficiency benefit and competition benefit of the transmission capacity. The Nash solution concept is employed to model the price-quantity game among Generating Companies, GenCos. The multiple Nash equilibria of the game are located by reformulating the Nash solution concept as an optimisation problem. The {"}worst{"} Nash equilibrium is used to assess the competition benefit of the transmission augmentation. The worst Nash equilibrium is the equilibrium which maximises the social cost, i.e. the sum of total generation cost and the total value of unserved energy. Thorough analysis of the modified Garver's example system is presented to clearly highlight the implications of the derived mathematical structure from different perspectives.",
keywords = "Competition benefit, Economic-based transmission augmentation, Game theory, Optimisation, Power system planning",
author = "N. Hosseinzadeh and Hesamzadeh, {M. R.} and Biggar, {D. R.}",
year = "2010",
language = "English",
booktitle = "43rd International Conference on Large High Voltage Electric Systems 2010, CIGRE 2010",

}

TY - GEN

T1 - A mathematical structure for the assessment of transmission system augmentation in the Australian National Electricity Market

AU - Hosseinzadeh, N.

AU - Hesamzadeh, M. R.

AU - Biggar, D. R.

PY - 2010

Y1 - 2010

N2 - It is possible to distinguish three types of benefits from a transmission network augmentation: the benefits of more efficient dispatch (the "efficiency benefit"), the benefits from enhanced system reliability (the "reliability benefit") and the benefits of a reduction in market power (the "competition benefit"). In the Australian National Electricity Market, NEM, the "competition benefit" of additional transmission capacity has not, in practice, been explicitly assessed. In the future, however, it is possible that generator market power in some markets will increase. Consequently, it is timely and important to develop a workable mechanism to model and calculate the competition benefit of additional transmission capacity within the current NEM rules. In this paper, we propose a new mathematical structure for market-based augmentation of the transmission system, which can capture both the efficiency benefit and competition benefit of the transmission capacity. The Nash solution concept is employed to model the price-quantity game among Generating Companies, GenCos. The multiple Nash equilibria of the game are located by reformulating the Nash solution concept as an optimisation problem. The "worst" Nash equilibrium is used to assess the competition benefit of the transmission augmentation. The worst Nash equilibrium is the equilibrium which maximises the social cost, i.e. the sum of total generation cost and the total value of unserved energy. Thorough analysis of the modified Garver's example system is presented to clearly highlight the implications of the derived mathematical structure from different perspectives.

AB - It is possible to distinguish three types of benefits from a transmission network augmentation: the benefits of more efficient dispatch (the "efficiency benefit"), the benefits from enhanced system reliability (the "reliability benefit") and the benefits of a reduction in market power (the "competition benefit"). In the Australian National Electricity Market, NEM, the "competition benefit" of additional transmission capacity has not, in practice, been explicitly assessed. In the future, however, it is possible that generator market power in some markets will increase. Consequently, it is timely and important to develop a workable mechanism to model and calculate the competition benefit of additional transmission capacity within the current NEM rules. In this paper, we propose a new mathematical structure for market-based augmentation of the transmission system, which can capture both the efficiency benefit and competition benefit of the transmission capacity. The Nash solution concept is employed to model the price-quantity game among Generating Companies, GenCos. The multiple Nash equilibria of the game are located by reformulating the Nash solution concept as an optimisation problem. The "worst" Nash equilibrium is used to assess the competition benefit of the transmission augmentation. The worst Nash equilibrium is the equilibrium which maximises the social cost, i.e. the sum of total generation cost and the total value of unserved energy. Thorough analysis of the modified Garver's example system is presented to clearly highlight the implications of the derived mathematical structure from different perspectives.

KW - Competition benefit

KW - Economic-based transmission augmentation

KW - Game theory

KW - Optimisation

KW - Power system planning

UR - http://www.scopus.com/inward/record.url?scp=84876747700&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=84876747700&partnerID=8YFLogxK

M3 - Conference contribution

BT - 43rd International Conference on Large High Voltage Electric Systems 2010, CIGRE 2010

ER -