Establishing pricing schemes for FACTS devices in congestion management

Frequently occurred congestions have prevented the deregulated power market to achieve its objective, cheaper energy for consumers, because congestion cost has been added to consumers´ locational marginal price (LMP) besides generation cost. Some measures are needed to solve this problem. Otherwise, benefits brought by deregulation will be incomplete. As an alternative to building new transmission lines, which is not preferred due to many factors, Flexible AC Transmission System (FACTS) was introduced to solve both the congestion problem G. Huang et al. (2002) and in turn reduce LMP S.C. Srivastava et al. (2000). However, a key issue is still missing, which is the pricing scheme for the utilization of FACTS devices and penalty for users to operate at their limits. Unless this issue is addressed, no proper incentives can be provided to market participants for new constructions. This paper proposes a pricing scheme for FACTS devices in congestion management, which addresses both the penalty and the utilization issues. Numerical examples are also used to demonstrate our ideas.