A Transmission Price Design Considering the Marginal Benefits of the Transmission and Spatiotemporal Information of Electricity Demand

Abstract

One of the most critical tasks of China’s power sector reformation is re-designing transmission and distribution (T&D) prices, which are essential in establishing fair and ordered power markets and encouraging the efficient allocation of resources. In view of the problems in China’s power market, such as the lack of a market mechanism for the reasonable allocation of congestion revenue, unreasonable transmission cost composition, and the failure of the transmission pricing mechanism to reflect the utilization degree of transmission resources by users in different geographical locations, this study proposes a transmission price design under the application scenarios of regional power grids and provincial power grids dominated by meshed AC networks in China that considers the marginal benefit of the transmission and spatiotemporal information of electricity demand. The proposed method effectively tackles the above-mentioned problem, with the transmission cost being divided into two parts: the expansion cost reflecting the marginal benefits of transmission, and the residual cost reflecting the rest. The expansion cost is objective and based on power system economics; it is calculated as the congestion revenue under the location marginal price-based wholesale electricity markets, resulting in a more reasonable division of transmission costs and allocation of congestion revenue. Furthermore, allocating the residual cost with the power flow distribution factor and the postage stamp method also reflects the utilization degree of transmission resources by users in different geographical locations. The effectiveness of this transmission price design is confirmed by testing it against a 3-bus and an IEEE 30-bus system.