Impact of the UPFC on the optimal transmission switching for cutting down market power cost

Abstract

The exercise of market power by the strategic generating companies (gencos) in the deregulated wholesale electricity market (WEM) should be mitigated, as it results in higher wholesale prices of electricity and a drop in competition in the WEM. Consequently, Optimal Transmission Switching (OTS) has been proposed as a means by which the System Operator in the WEM can use to mitigate it. It is also imperative that the effect of the Unified Power Flow Controller (UPFC) on reducing the cost due to the market power using OTS must be investigated. Therefore, this study used the Fast Voltage Stability Index (FVSI) to select the critical lines to be optimally switched and compensated. The compensation factor was used to size the UPFC. The modified IEEE 14-bus system was utilized as the test system. Worst Nash Equilibrium (WNE) was used to model the behavior of the strategic gencos in exercising market power on an EPG. The OTS under WNE was modeled and solved in the General Algebraic Modeling System (GAMS) studio with the aid of the Network Enabled Optimization System (NEOS) server. The results of the FVSI were used to modify the parameters of the EPG in the GAMS studio and identify critical lines for the OTS. The simulated results revealed that in using OTS under WNE, strategic gencos dispatch more power in the presence of the UPFC than in its absence, reducing the cost associated with the market power of the strategic gencos.