Transmission pricing scheme for open electricity market

Pao Yue-kong Library Electronic Theses Database

Transmission pricing scheme for open electricity market

 

Author: Sang, Zixia
Title: Transmission pricing scheme for open electricity market
Degree: M.Sc.
Year: 2008
Subject: Hong Kong Polytechnic University -- Dissertations.
Electric utilities -- Rates.
Electric industries.
Department: Dept. of Electrical Engineering
Pages: vi, 152 p. : ill. ; 30 cm.
Language: English
InnoPac Record: http://library.polyu.edu.hk/record=b2199001
URI: http://theses.lib.polyu.edu.hk/handle/200/31
Abstract: Transmission network is a vital mechanism in competitive electricity markets which has to be designed on purpose to guarantee competition and non-discriminatory open access to all users. Hence, pricing on the use of transmission network must provide adequate economic signals that allow the market to make decisions on resource allocation for system expansion, and management of transmission congestion. The main objective of this project is to devise a comprehensive transmission pricing scheme, providing a methodological and hybrid design to transmission tariffs and attempting to offer a synthesis of recent economic research on this subject, for the ISO who serve to achieve and provide the transmission network functions as outlined in the following areas: Economic efficiency, Non-discrimination, Transparency, Cost coverage, Congestion avoidance. Firstly we start with asking for first-best generation levels and consumption levels would be freely chosen by individual generators and individual consumers of they were facing prices equal to the marginal value of electricity in the optimal allocation: the so-called nodal price. It is an application to electricity of the general method of marginal-cost pricing in order to implement the socially optimal allocation of goods. Secondly, we focus on how we can send investment signals to grid users, which should be based on long-run marginal cost. As a result, we should study how long-run marginal costs can diverge from short-run marginal cost, which is another role of transmission tariffs. Of course it is necessary to focus on some factors like imperfect competition and vertical integration to adjust and complement the tariff based on nodal price in the following. Finally, a three-tiered transmission tariff is proposed, contains three aspect of pricing mentioned above. The work approach is to firstly collect relevant materials and information on the latest development on electricity transmission tariff setting in the world. The source of information is mainly come from the engineering institution symposium papers, journals, newspapers and web sites.

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