Adequacy and responsibility of locational generation and transmission-optimization procedures

Under the deregulated environment of electric power industry, generation can be installed anywhere in the system resulting in an "imbalance" between the generation and transmission. Shortages of generation in some subregions result in "bottle-necks" within a system raising reliability concerns regarding subregional adequacy. Excess of generation capacity raises the issue of how much capacity in which location is entitled to receive payments for installed capacity. Therefore, there is a need to determine locational requirement for both generation and transmission such that assistance to subregions under random generator outages is not restricted. This paper presents optimization procedures for the determination of adequacy and responsibility for locational generation and transmission. The outlined procedures applicable to situations of planning to identify additional needs as well as to situations of market design for installed capacity in subregions. The paper closes by a discussion of forward auctions for the procurement of capacity in subregions.