Transmission Congestion Management and Pricing in Simple Auction Electricity Markets

Abstract

This paper presents a novel technique to analyze, manage and price transmission congestion in electricity markets based on a simple auction mechanism. The proposed technique is basically an iterative rescheduling algorithm, relying on an ``on-line'' evaluation of the transmission system congestion, as defined by a System Security Index (SSI), and associated sensitivities, which are all computed based on formulas that account for voltage stability constraints as well as thermal and bus voltage limits. The methodology is tested using a 3-area test system, a 6-bus test system with both demand-side bidding and inelastic demand, as well as a 129-bus model of the Italian High Voltage transmission system with demand-side bidding. The results obtained for these test systems with the proposed technique are compared with similar results obtained from an optimization-based method.