International Journal of Engineering and Technical Research (IJETR)

ISSN: 2321-0869, Volume-2, Issue-5, May 2014

New Optimization Technique For Nodal Price

And Reliability Calculation
Pushpendra Kumar Sharma, Abhishek Sanghi, Devendra Mittal, Laxmichand Sharma

Abstract Power system restructuring and deregulation has

changed the way in which system reliability management and
electricity pricing done over the decades. The main purpose of
restructuring is to offer customers with a choice of suppliers
based on reliability and price requirement. Load shedding and
generation redispatch mechanism used in the existing
reliability evaluation technique have to be improved to include
these changes. In this paper a planned technique provides an
implement to compute the nodal reliability and nodal prices for
market participants. The market participants are able to make
use of this information to make most favorable trading
decisions in market trading and operation. Contingency
analysis has been done to determine the selected contingency
system states. An optimization technique is proposed to
determine the nodal prices for each contingency state obtained
from contingency analysis for restructured power system with
bilateral model. The objective of the problem is to minimize the
generation cost subjected to market and network constraints.
The impact of unavailability of generation and transmission
system on load point reliability and nodal prices has been
shown. Instead of using nodal price for the normal operation
state, the expected nodal price and the associated standard
deviation are used to represent the volatility of nodal price due
to random failures. The 6 bus reliability test system (RBTS)
has been analyzed to illustrate the technique.

I. INTRODUCTION
Electric power systems are among the most complex and
large systems that exist in the world. Broadly speaking, a
power system is composed of the three functional zones of
generation, transmission, and distribution. Over the years,
electric power industry is owned by large utilities which have
all the control over all the functions of electric power system.
These utilities are referred as vertically integrated utilities.
Each utility has one or more control centers that maintain
security and reliability of a specific region. The basic
function of a power system is to provide electric power to its
customers as economically as possible and with an
acceptable degree of continuity and quality [6]. Reliability is
Manuscript received May 20, 2014. one of the most important factors considered in power system
Pushpendra kumar sharma, M.Tech. II Year (Power Systems) planning and operation in both vertically integrated and
Student JNIT University Jaipur, Rajasthan, India
Abhishek sanghi, Asst. Professor, Department of Electrical
deregulated utility environments.
Engineering JNIT University Jaipur, Rajasthan, India Reliability is an inbuilt characteristic and a specific
Devendra mittal, Asst. Professor, Department of Electrical measure of any component, device or system, which
Engineering JNIT University Jaipur, Rajasthan, India describes its ability to perform its intended function. In terms
Laxmichand sharma, M.Tech. II Year (Power Systems) Student
JNIT University Jaipur, Rajasthan, India of a power system, the measures of reliability indicate how

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 New Optimization Technique For Nodal Price And Reliability Calculation

well the system performs its basic function of supplying These three functional zones can be organized into the three
electrical energy to its customers [9]. The likelihood of hierarchical levels (HL) shown in Figure 3.
customers being disconnected for any reason can be
reduced by increased investment during the planning
phase and/or the operating phase. Over investment can
lead to excessive operating costs. On the other hand, under
investment can lead to lower reliability. How to trade off
these two aspects is a major challenge to power system
managers, planners, designers, and operators.
In order to resolve the problem between the economic and
reliability constraints, design, planning, and operating
criteria and techniques have been developed and applied over
many decades.

Fig.3 Power System hierarchical levels

Reliability assessment at hierarchical level I (HLI) is

normally termed as generating capacity adequacy
evaluation and is concerned with only the generation
facilities. In an HLI study, the total system generation
including interconnected assistance is examined to
determine its adequacy to meet the total system load demand.
The transmission network and the distribution facilities
Fig.1 Power System Structure under Vertically Integrated Utilities are not part of the analysis at this level. Reliability
assessment at hierarchical level II (HLII) involves the
Figure 1 shows power system structure under vertically analysis of the combined generation and transmission system
integrated utilities [7]. This paper presents a comprehensive in regard to its ability to serve the system load. The reliability
technique to determine both nodal prices and nodal of supply at the individual load points in a composite
reliabilities of deregulated power systems. The system is a function of the capacities and availabilities of
characteristics of customer demand response to nodal price the individual generation, transmission facilities, and the
are investigated. system topology. Reliability assessment at hierarchical
level III (HLIII) includes all of the three functional zones
II. POWER SYSTEM RELIABILITY EVALUATION and is not easily conducted in a practical system due to
the computational complexity and the scale of the
Power system reliability can be divided into the two
assessment. This thesis is centered on adequacy assessment
aspects of adequacy and security as shown in Figure 2.
at HLII.
Adequacy relates to the existence of sufficient facilities
Various techniques have been developed and applied over
within the system to satisfy the customer requirements. It is
many decades for reliability evaluation of power system.
associated with static conditions and long-term analysis.
Most of these techniques are deterministic in nature and
Security relates to the ability of the system to respond to
some of them still used today. Deterministic criteria were
disturbances. It is associated with dynamic conditions and
developed in order to account for randomly occurring
short-term analysis. An overall power system can be divided
failures. Their essential weakness is that they do not and
into the three basic functional zones of generation,
cannot account for the probabilistic or stochastic nature of
transmission, and distribution.
system behavior, of customer demands, or of component
failures.

III. CALCULATION OF NODAL RELIABILITY AND

PRICES
General
The function of a power system is to produce electrical
energy at the generating sources and then move this energy to
the major load points. The purpose of system reliability
evaluation is to estimate the ability of the system to perform
this function. Assessment of system reliability is very
Fig.2 Subdivision of System Reliability complex since it must consider the integrated impacts of
generation and transmission. HLII studies include many
aspects such as load flow analysis, contingency analysis,

339 www.erpublication.org
 International Journal of Engineering and Technical Research (IJETR)
ISSN: 2321-0869, Volume-2, Issue-5, May 2014
generation rescheduling, transmission overload alleviation, Raphson OPF technique. The nodal prices of active power
load curtailment etc. and reactive power at bus i under the optimum solution is
In this paper, contingency enumeration and state obtained as follows:
selection are used to determine contingency state. AC L j
optimal power flow technique is used to determine the nodal pij (Rs/MW) (11)
prices. In the case of generation inadequacy and network Pi j
congestion, generations are re-dispatched and loads are shed L j
to remove network violations for a contingency state. qij (Rs/MVar) (12)
Qi j
Calculation The nodal reliability indices for a contingency state j are the
Considering a power system with Nc independent nodal load curtailment and nodal energy not supplied. These
components, the reliability parameters for contingency state j indices can be calculated using the following equations:
with exactly b failed components can be determined using the
following equations: NENS i j d j * LC pij (MWh) (13)
b Nc
p j U c * Ac (1) NR Optimal Power Flow
c 1 c b 1
The above described minimization optimization problem can
b Nc be solved with Newton Raphson method. The above
D j c c
(2) constrained minimization problem can be transformed into
c 1 c b 1 an unconstrained one by augmenting the load flow
d j 1/ D j (3) constraints into objective function [8]. The additional
variable is known as Lagrange multiplier function or
The basic problem is to evaluate the nodal reliability and incremental cost function in power system optimization. The
nodal prices for each system state. The basic reliability Lagrange function for the above problem is given as
technique is used to determine state probability, departure NG N
rate and duration. For a contingency state, the objective of L( Pg , | V |, ) f ( Pgi ) pi [ Pi (| V |, ) Pgi PLi ]
i 1 i 1
optimization is to minimize the total system cost including
N
generation cost. For a contingency state j, the nodal prices
and the generation re-dispatch can be determined by solving

i NG1
qi [Qi (| V |, ) Qgi QLi ]

the following optimization problem: (14)

Min f j
iN g gNGij
(aig * (Pigj ) 2 big * Pigj cig ) In above Lagrange multiplier function, the control variables
are Pgi , i , pi , qi , | Vi | . Any small variation in control
(4)
Subjected to following constraints: variables about their initial values is obtained by forming
i) Load flow Equations: At bus i, total differentials which is give below (in matrix form):
N
H Pg Pg H Pg H Pg p H Pg |V | H Pg q Pg
Pigj PLi Vi j * Vkj * | Yikj | * cos( i j kj ikj ) (5) H H H p H |V | H q
gNGij k 1 Pg
N H p Pg H p H p p H p|V | H p q * p
Q j
ig QLi Vi j * Vk j * | Yikj | * sin( i j kj ikj ) (6)
k 1

H |V | Pg H |V | H |V |p H |V ||V |

H |V |q | V |

gNGij
H q Pg H q H q p H q|V | H q q q

ii) Generating unit limits: J Pg
Pigj,min Pigj Pigj,max J
(7)
Q Q = J p
j j j
Q ig ,min ig ig ,max (15)
(8)
iii) Voltage limits: J |V |
| Vi ,jmin | |Vi j | | Vi ,jmax | J q
(9)
iv) Line flow constraints: Or, [H]*[change in control variables] = [J] (16)
|S | |S
j
ik
j
ik , max | (10)
Where [H] is Hessian matrix, [J] is Jacobian matrix.
Starting from initial data of an interconnected power system
Equations (3)(10) are a non-linear optimization problem the optimal power flow solution can be obtained by solving
with a non-linear objective function, non-linear equality and the equation (16) for unknown control variables. In this
non-linear equality constraints. This problem can be solved method there no need for separate load flow study. This
by using various Newton methods with second order method is faster and gives accurate solution.
convergence properties.
Newton Raphson optimal power flow technique is used to Calculation Of Nodal Reliability And Nodal Prices
solve the optimization problem. The Lagrangian function In a deregulated power system, the expected values, the
standard deviation of nodal prices and nodal reliabilities are
L j of the above problem for state j is formed. The optimal
important information for the risk analysis of market trading,
generating unit outputs can be obtained using Newton planning and operation. The expected nodal price is a

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 New Optimization Technique For Nodal Price And Reliability Calculation

weighted average of the prices for different states. Unlike Fig.5 6 Bus RBTS
many other commodities, electricity cannot be stored in large Nodal Prices and Nodal Reliability
amounts and needs a continuous balance between supply and Random failures up to second order are considered in the
demand. The price for a contingency state might be quite evaluation. Nodal prices and Nodal reliability for are
different from the price expected. Inadequate generation and presented in terms of the first order failure and second order
congestion in some contingency states result in extreme price failure respectively. Nodal prices for the first order failure are
volatility or price spikes. The random nature of failures given in Table 1. The Nodal prices for the second order line
results in great price uncertainty. As customers and failures are shown in Table 2. From the Table 1-2, it can be
producers face volatile prices, their reactions will depend on said that as the distance of the load from the generation
their attitude towards accepting risk. A risk neutral increases, the price increases. It can be seen that the second
participant will value a certain benet the same as an equal order line outages produces larger price fluctuations.
amount of expected benet that involves risk, whereas a risk The load at different buses has to be shed to remove
adverse participant, who faced with two solutions with the network violations. The Nodal Energy Not Supplied (NENS)
same expected benet (but different risks), will accept the for second order outages are given in Table 3. The price
one with lower risk. fluctuations at Bus 1 due to transmission line failure are
Therefore hedging contracts have become an important tool small as compared to other buses. Due to failure of Line 5 and
dealing with price risks. Customers who wish to hedge Line 8, both load at Bus 5 and Bus 6 are isolated.
against price risk and maintain a certain reliability level can
sign specic contracts with producers. The producers can Table 1
also use contracts to hedge against prot volatility. These Nodal prices for first order outages
require measuring the risk of being exposed to high prices.
Standard deviation of nodal prices can be used to evaluate the
extent of price uctuating around its expected value.
Considering all possible system states, the expected nodal
prices and nodal reliability indices can be determined using
the following equations.
The expected nodal price of real power:
SN
pi p j * pij (Rs/MW) (17)
j 1

The standard deviation of pi :

SN
pi (
j 1
j
pi pi ) 2 * p j (Rs/MW) (18)

The expected nodal energy not supplied:

SN
ENENS i D j * p j * NENS ij (MWh/Yr) (19)
j 1

IV. TEST SYSTEM STUDY

The Reliability Bus Test System has been analyzed to
illustrate the technique. The 6-Bus RBTS [5] is shown in the
Figure 5.Figure shows the single line diagram of the
system.The distribution system is represented as equivalent
bulk load point. The nodal reliability and nodal prices of real
power and nodal prices for reactive power is calculated. The Table 2
system consists of 11 generators and 9 transmission lines. Nodal Prices for second order outages

341 www.erpublication.org
 International Journal of Engineering and Technical Research (IJETR)
ISSN: 2321-0869, Volume-2, Issue-5, May 2014

Table 3
NENS for second order outages

Fig. 7 Nodal Prices at Bus 2

Fig. 8 Nodal Prices at Bus 3

From figure 6 it is clear that a nodal prices hike is more occur

at bus 1 in case of failure of line 2 and line 7 since load at bus
4 will be supplied will have to be supplied by generators at
Table 4 bus as a result demand hike occur at bus 1 which result in
Reliability and price indices for each bus of RBTS price hike. In figure 7 as the case happen at bus 1 same occur
at bus 2 in case of failure of line 1 or 6, demand rises which
result in nodal price hike at bus 2. Bus 3 are load buses so
nodal price depends on demand and transmission losses,
when transmission losses are more price is more, as can be
concluded from the figure 8.
Figure 9-11 shows the price spikes at Bus1 to Bus 6 in second
order outages (line) respectively.

Figure 6 - 8 shows the price spikes at Bus1 to Bus 6 in first

order outages (line) respectively

Fig. 9 Nodal Prices at Bus 4

Fig. 6 Nodal Prices at Bus 1

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 New Optimization Technique For Nodal Price And Reliability Calculation

provided by the technique can be used by market participants

to make optimal decisions in market trading and operation.

Fig. 10 Nodal Prices at Bus 5

REFERENCES
[1] M. Ghayeni, R. Ghazi, Transmission Cost Allocation in Restructured
Power Systems Based on Nodal Pricing Approach by Controlling the
Marginal Prices, Iranian Journal of Electrical & Electronic Engineering,
vol.-6, no.-2, pp. 93-101, June 2010.
[2] Ali Mansouri, Ali Aazami, Amin Omidian, Ehsan Mohamadian, Rahmat
Aazami, Evaluation of Power System Reliability Considering Direct
Load Control Effects, International Journal of Electrical and Computer
Engineering (IJECE) vol.-3, no.-2, pp. 254-259 ISSN: 2088-8708, April
2013.
[3] P.Wang, Y.Ding and Y.Xiao, Technique to evaluate nodal reliability
indices and nodal prices of restructured power systems, IEE proceedings
Generation, Transmission and Distribution, vol.-152, no.-3, pp. 390-396,
May 2005.
[4] P.Wang, Y.Ding and L.Goel, Reliability assessment of restructured power
systems using optimal load shedding technique, IEE Generation,
Transmission, Distribution, vol. 3, no.-7, pp. 628640, December 2009.
[5] R.Billinton, S.Kumar, N.Chowdhhury, K.Chu, K.Debnath, L.Goel,
E.Khan, P.Kos, G. Nourbakhsh, J.J. Oteng Adjei ,A reliability test system
for educational purposes-basic data, IEEE Transaction on Power System,
vol.-4, no.-3, pp. 12381244, August 1989.
Fig. 11 Nodal Prices at Bus 6 [6] M. Shahidehpour and M. Alomoush, Restructured Power System
Operation, Trading and Volatility, New York: Marcel Dekker, 2001.
Figure 9-11 shows that real and reactive nodal prices at many [7] Loi Lei Lai, Power System Structuring and Deregulation: Trading,
load buses are higher than at generator buses and reactive Performance and Information Technology, New York: Wiley 2002.
nodal prices are smaller than real nodal prices at all the [8] A.Chakrabarti and S.Halder, Power System Analysis Operation and
buses. These nodal prices can be used to calculate significant Control, New Delhi: PHI Learning Private Ltd., 2010.
wheeling charges of real and reactive power (marginal [9] R.N.Allan and R.Billinton, Power System Reliability and Its Assessment:
Part 1 Background and Generating Capacity, Power Engineering Journal,
network revenue) as difference of revenue received from real vol.-6, no.-4, pp .191-196, July 1992.
and reactive demand and expenditure for real and reactive
generation. Reactive power nodal price is affected by the
reactive power production costs of generations and the
capital investment cost of capacitors. Reactive power nodal
prices can be related to the urgency of the reactive power
supply and an incentive can be given to improve load power
factor and reduce power demand. The proposed nodal
transmission pricing model may forms a basis to calculate
network revenue for bilateral and multilateral power
transactions in deregulated power systems to wheel the
power between the buses.

V. CONCLUSION
Basically, main objective of power system restructuring and
deregulation is to introduce competition in the power
industry and to allow customers to select their suppliers
based on price and reliability. So, this thesis presents a
comprehensive technique to evaluate nodal reliability and
nodal prices of restructure power system. Many new
problems created by customer choice regarding system
operation, pricing and reliability planning are also solved by
this technique. Optimization problem is used to calculate the
nodal reliability and nodal prices. The problem is formulated
using Newton Raphson optimal power flow technique. The
main objective of the optimization problem is to minimize
the total system generation cost. For this purpose six bus
reliability test system (RBTS) has been analyzed to illustrate
the technique. The analysis of results show that due to
congestion in some contingency states causes extreme price
volatility or price spikes. The random nature of failure
creates price uncertainty. Prices at different nodes of the
system can be different due to transmission loss and
constraints. Nodal prices and Nodal reliability indices for
each state, the expected values and the standard deviations of
these indices are very important information for the risk
analysis of market trading, planning and operation. The
proposed technique provides a tool to calculate all this
information for market participants. The information

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