Interchange of Power & Energy

By Chandra Shekhar Reddy Atla

Contents
Introduction Economy Interchange b/t interconnected Utilities Multiple Utility Interchange Transactions Other types of Interchange Power pools Transmission Effects and Issues

Introduction
The factors which effects Interchange of Power are:
Industry Structure Regulation Vs Deregulation Non utility Participation, Cogeneration plants Open transmission Access(single or multiple ownership of the transmission systems) Fair and equitable rates for the use of transmission networks

Economy Interchange b/t Interconnected Utilities

Advantages of Interconnection System
System is more reliable: loss of a generating unit in one of the utility can be made from spinning reserve among units throughout the interconnection. Hence spinning reserve will be less. Better economic operation Long term interchange transactions(one system in surplus and other in deficiency) Example 10A:

Interutility economy energy Evaluation

Example 10B:
Area1:
sno Demand Area 1, (MW) (R/MWh) 1 2 3 4 5 6 700 650 600 550 500 450 17.856 17.710 17.563 17.416 17.27 17.123 Inter change from Area 2 (MW) 0 50 100 150 200 250 sno Demand Area 2, (MW) (R/MWh) 1 2 3 4 5 6 1100 1150 1200 1250 1300 1350 16.185 16.291 16.395 16.501 16.656 16.831 Inter change to Area 1 (MW) 0 50 100 150 200 250

7
8

400
350

16.976
16.816

300
350

7
8

1400
1450

17.006
17.181

300
350

Interchange evaluation with Unit Commitment

Interchange evaluation for extended hours requires the many more factors like unit commitment (UC) than just the relative incremental costs of the two systems. The procedure for studying interchange of power over extended periods of time is as follows.
Each system must run UC over the study period. Each system then runs another unit commitment, one system having an increase in load, the other a decrease in load over the time th e interchange is to take place. Each system then calculates a total production cost for the base-unit commitment and for the unit commitment reflecting the effect of the interchange.

Multiple utility Interchange Transactions

Most power systems are interconnected with all their immediate neighboring systems. Example 10C: Interchange agreement A: area 1 buys 300MW from area 2 Interchange agreement B: area 1 sells 100MW to area 3 min. generation limit in area 3 : 450 MW
Total Demand (MW) 450 550 Area 3, (R/MWh) 18.125 18.4 Area 3 , production cost (R/h) 8220 10042

Area 1 Gen (MW) Start After agreement A 700 400

Area 1 cost (R/h) 13677.21 8452.27

Area 2 Gen (MW) 1100 1400

Area 2 cost Area 3 Gen (MW) (MW) 18569.23 23532.25 550 550

Area 3 cost (R/h) 10042 10042

After agreement B

500

10164.57

1400

23532.25

450

8220

Agreement A: Saves area1 : 13677.21 - 8452.27 = 5224.94 R/h Costs area 2 : 23532.25 - 18569.23 = 4963.02 R/h After splitting savings, area 1 pays area 2 : 5224.94 ((5224.94-4963.02)/2) : 5093.98 R/h Agreement B: Saves area1 : 10164.57 8452.27= 1712.3 R/h Costs area 3 : 10042 8220 = 1822 R/h After splitting savings, area 3 pays area 2 : 1822 ((1822 1712.3)/2) : 5093.98 R/h Summary: Area 1 pays a net : 5093.98 1767.25 = 3326.73 R/h Area 2 receives : 5093.98 R/h Area 3 pays : 1767.15 R/h

Area 1 Gen (MW) Start After agreement B 700 800

Area 1 cost (R/h) 13677.21 15477.55

Area 2 Gen (MW) 1100 1100

Area 2 cost Area 3 Gen (MW) (MW) 18569.23 18569.23 550 450

Area 3 cost (R/h) 10042 8220

After agreement A

500

10164.57

1400

23532.25

450

8220

Agreement B: Costs area 1 : 15477.55 13677.21 = 1800.34 R/h Saves area 3 : 10042 8220 = 1822 R/h After splitting savings, area 3 pays area 1 : 1800.34+((1822-1800.34)/2) : 1811.17 R/h Agreement A: Saves area1 : 15477.55 10164.57 = 5312.98 R/h Costs area 2 : 23532.25 18569.23 = 4963.02R/h After splitting savings, area 1 pays area 2 : 5312.98 ((5312.98-4963.02)/2) : 5138 R/h Summary: Area 1 pays a net : 5138 1811.17= 3326.83 R/h Area 2 receives : 5138 R/h Area 3 pays : 1811.17 R/h

Other types of interchange

Capacity interchange: In selling capacity, the system that has a surplus agrees to cover the reserve needs of other system. Pure capacity reserve interchange agreements do not entitle the purchaser to any energy other than emergency energy requirements.

Diversity Interchange: This type of arrangements may be made between two large systems covering operating areas that span different time zones.

Other types of interchange

Energy Banking: Energy banking agreements usually occur when a predominantly hydro system is interconnected to a predominantly thermal system. Emergency Power Interchange: It is very likely that at some future time a power system will have a series of generation failures that require it to import power or shed load. Under such emergencies, it is useful to have agreements with neighboring systems that commit them to supply power so that there will be time to shed load.

Other types of interchange

Inadvertent Power Exchange: Because of the non perfect AGC devices, there are regularly occurring instances where the error in controlling interchange results in a significant accumulated amount of energy. Under normal circumstances, system operators will pay back the accumulated inadvertent interchange energy for megawatt hour, usually during similar time periods in the next week. Differences in cost rates are ignored.

Power Pools
When a system is interconnected with many neighbors, utilities may form a power pool that incorporates a central dispatch office, has a responsibilities of interchange between members, as well as other administrative task which will give greater economics in operation. Operating advantages of centrally dispatched power pools:
Minimize operating costs Perform a total system wise unit commitment Minimize the reserves being carried throughout the system Coordinate maintenance scheduling to minimize costs and maximize reliability by sharing reserves during maintenance periods. Maximize the benefits of emergency procedures

One of the most difficult tasks of pool operation is to decide who will pay what to whom for all the economic transactions built into the pool agreement.

Power Pools
Some of the individual utilities may perceive the pool requirements and disciplines as disadvantages. Factors that have been include
The complexity of the pool agreement and the continuing costs of supporting the inter-utility structure required to manage and administer the pool. The operating and investment costs associated with the central dispatch office and the needed communication and computation facilities. The additional complexity that may result in dealing with regulatory agencies if the pool operates in more than one state. The feeling on the part of the management of some utilities that the pool structure is displacing some of an individual systems management responsibilities and restricting some of the freedom of independent action possible to serve the needs of its own customers.

Energy-Broker System
The advantage of energy-broker system (pool members can interact through broker for sales and purchases of energy instead of dealing directly with each other) is that the broker can observe all the buy and sell offers at one time and achieve better economy of operation. The pricing formula for this arrangement is: Fc = (Fs+Fb)/2 where, Fc = cost rate of the transaction (R/MWh) Fs = incremental cost of the selling utility (R/MWh) Fb = decremental cost of the buying utility (R/MWh)

 Example 10D: Utilities Selling Energy A B Incremental Cost (R/MWh) 25 30 MWH for sale Sellers total Increase in cost (R) 100 100 2500 3000

Utilities Buying Decremental MWh for Energy cost (R/MWh) purchase C D 35 45 50 150

Buyers total decrease in cost (R) 1750 6750

Net pool savings: (1750+6750) (2500+3000) = 3000 R

 Example 10D: Transaction 1. A sells 100 MWh to D Price (R/MWh) (25+45) = 35 Total Cost (R/MWh) 3500

2. B sells 50 MWh to D
3. B sells 50 MWh to C

(30+45) = 37.5
(30+35) = 32.5

1875
1625

Savings: A savings B savings C savings D savings

: 3500 2500 = 1000 R : (1875+1675) 3000 = 500 R : 1750 1625 = 125 R : 6750 (3500+1875) = 1375 R

Allocating Pool Savings

There are two general types of allocation schemes: First method, may be performed in a real-time mode with cost and savings allocations made periodically using the incremental and decremental costs of the systems. Second, the allocation of costs and savings is done after the fact using total production costs. In this type of calculation, the unit commitment, hydro schedules, and economic dispatch of each individual pool member are recomputed for an interval after the pool load has been served.

 Example 10E: Allocating pool savings: First Method 10% of the gross systems savings to compensate those systems that provide transmission facilities to the pool.
Utilities Selling Energy A B Incremental Cost (R/MWh) 25 30 MWH for sale 100 100 Sellers total Increase in cost (R) 2500 3000

Utilities Buying Decremental Energy cost (R/MWh)

C 35

MWh for Buyers total decrease purchase in cost (R)

50 1750

45

150

6750

Pool savings = (6750+1750)- (2500+3500) = R 3000 Savings withheld for transmission compensation = 10% of savings =R 300 Net savings = R 2700

Sellers weighted average incremental cost = (25x100 + 30x100) / (100+100) = 27.5 R/MWh Buyers weighted average decremental cost =(35x50 + 45x150)/(50+150) = 42.50 R/MWh Finally, Individual savings are: A sells 100 MWh to pool: 100x 0.9x(42.5-25)/2 = R 787.5 B sells 100 MWh to pool: 100x0.9x(42.5-30)/2 = R 562.5 C buys from pool: 50x0.9x(35-27.5)/2 = R 168.75 D buys from pool: 150x0.9x(45-27.5)/2 = R 1181.25

 Example 10 F: Method 2: after the fact computations

Area 1 2 3 Total Area Load (MW or MWh) Own-load Production cost (R/h) 700 1100 550 2350 13677.21 18569.23 10042.00 42288.44

Under pool dispatch: (with the constraint of min generation in area 3 is 450 MW)
Area Area Generation (MW) Production Cost (R/h) Incremental Cost (R/MWh)

1
2 3 Pool

458.9
1441.1 450 2350

9458.74
24232.66 8220.00 41911.40

17.149
17.149 18.125 17.149

Total savings due to pool dispatch = 42288.44 41911.4 = R 377.04 Total pool energy = Area 2 is supplying 341.1 MWh

Cost of pool energy: cost of energy supplied to the pool by area-2 = 24232.66 18569.23 = R 5663.43 + pool savings = R 188.52 Total = R 5851.95 Interchange price rate = 5851.95/341.1 = 17.156 R/MWh

The final outcome for each area is:

Area Pool energy Received (MWh) +241.1 -341.1 Interchange Cost (R) 4136.34 -5851.95 Production Cost (R) 9458.74 24232.66 Net Cost (R)

1 2

13565.08 18380.71

3
Pool

+100

1715.61
0

8220
41911.4

9935.61
41911.4

Savings: Area-1 Savings : 13677.21 13565.08 = 112.13 R/hr Area -2 Savings : 18569.23 18380.71 = 188.52 R/hr Area-3 Savings : 10042 9935.61 = 106.39 R/hr

Transmission Effects & Issues

This involves technical (transfer capacity limit etc) and structural considerations (multiple owner ship of interconnection). Security and reliability Power Transfer Limitations Wheeling: Wheeling is the use of some party's transmission systems for the benefit of other parties. The no. of possibilities for transactions is very large, and the power flow pattern that results depends on the configuration and the purchase-sale combination plus the schedules in all of the systems.

 Wheeling:

Difficulties arise when wheeling increases power losses in the intervening systems and when the parallel path flows utilize capacity that is needed by a wheeling utility.

Rates for Transmission Services in Multiparty Utility Transactions

Rates for transmission service have a great deal of influence on transactions when wheeling is involved. Pricing schemes: Contract path (simple scheme): base prices on incremental power flows, R/MWh transferred Marginal cost (complex scheme): based on bus incremental costs (BIC)

 Bus incremental costs (BIC): In economic dispatch the basic incremental cost is calculated by the bus penalty factor times the incremental cost of power at the bus is equal to the system . For additional small increment of power : If one generator is connected to system cost for additional generation at this bus = if more than one generator connected to a bus and this is the only source of power cost for additional generation at this bus = where is same for all generators when power dispatched economically

 Bus incremental costs (BIC): If there are multiple generators at different buses throughout the power system, and they have dispatched economically (i.e., accurate penalty factors have used in economic dispatch with equal system ) cost for additional generation at any individual generation bus = generator own (not system )

For large increment of power delivery, the optimal dispatch must be recalculated and the cost is not equal to as mentioned above points.

Fig: 3- bus system

Without transmission constraint, the BIC at any bus is fairly close to the BIC at other buses.

Let us consider: Gen 1 has high Gen 2 has low

With power transfer limit for the line b/t bus3 to bus2: If load is increased further at bus 2, BIC of the bus 2 will be high reflecting the high incremental cost of the bus 1 generator

Transactions Involving Nonutility Parties

Wholesale market: utilities may purchase for resale Retail market: sales are made directly to consumers control area configurations with non utility parties which involved in tractions.
Wholesale transaction The utility AGC system could treat the Generator G as a local source or part of scheduled interchange

Fig: Nonutility generator G delivering P MW to local system A

Transactions Involving Nonutility Parties

Wholesale wheeling the output of G would be treated as scheduled interchange by both systems

Fig: Nonutility generator G delivering P MW to system B

Transactions Involving Nonutility Parties

retail wheeling The unit G could be scheduled in a verity of different fashions depending upon the agreement with system A

Fig: Nonutility generator G delivering P MW to retail customer in system A

Transactions Involving Nonutility Parties

unit G will be used in more number ways based on the agreements with system A and system B

Fig: Nonutility generator G delivering P MW to retail customer in system B