Transmission pricing using improved sensitivity indices

Transmission pricing evaluation is a complex task and becomes more important after introducing the competition into the electricity supply industry. Thus many methodologies have been proposed including pricing based incremental/marginal methods, tracing power flow and so on. But those methods still have some weak features and limits. For example, when capacity is used to evaluate the tracing of power flows and distribution factors, the circulating of power flows is a problem. Even though there are attempts to solve this problem by using the OPF model, it is difficult to work in practice. In addition, because of the complexity of power flows, the power injected or attracted from any bus in the system would affect other lines in the network without using or flowing through those paths. In this aspect, the sensitivity method can produce the good signal to reflect such a signal. Based on the investment cost related pricing (ICRP) method, this paper introduces the sensitivity index approach based on the Jacobian matrix obtained from the Newton-Raphson power flows to calculate the transmission prices. Using this method, the effects due to power flows in the whole system can be considered by power injections at each bus via the sensitivity indices. This means that the system topologies, line impedance, voltages, power angles, costs of circuits per capacity and directions of power flows of the whole system are taken into account. Two systems are simulated. The results from the proposed method are compared with ones from the ICRP method