Benefits of employing an on-line security limit derivation tool in electricity markets

Security limits in both re-structured and vertically integrated power systems are usually derived based on a limited number of off-line system studies using a previously defined portfolio of demand and generation scenarios, which may incur risk in real-time operation as well as driving high electricity prices. This work addresses the existing challenges facing independent system operators to provide reliable, competitively priced electricity to meet demand. An on-line security limit derivation (OLSLD) tool is suggested to improve both the real-time system security and the market efficiency; existing challenges from both technical and business process point of view in employing such a tool are discussed. As a benchmark system, the Ontario´s electricity market is used in this paper to demonstrate the existing security requirements and potential gains to the market in employing OLSLD tool along with recommendations and guidelines in a successful implementation.