Valuating Controllable Devices in Congested Networks

The electric transmission networks are pushed more and more towards their limits. Even in highly meshed networks like in Europe this leads to congestions which in turn can produce significant price differences between the areas around these congestions. Another – maybe more visible – problem with congested networks are security concerns. Recent events, e.g. the italian blackout on September 28 2004, brought this issue into evidence again. Eliminating these congestions by means of installing new transmission lines is normally difficult, if not impossible. It often takes decades from evaluating a new line to the time it is installed. Political and environmental regulations further add to the difficulties in improving the physical network. This paper will present different methods to relieve congestions in general – including short-term and long-term methods and bidding systems for transmission services – and with controllable devices such as Flexible AC Transmission Systems (FACTS) in particular. We will discuss the complexity of these methods, by looking at the pros and contras of detailed simulations versus simplified solutions. One possibility to relieve congestion is to increase the available transfer capacity over a congested link by installing a controllable device. We will show a methodology to determine the value of such an installation. Using a simplified network model we use optimization techniques to determine the electricity price in different areas. This data is used as input for the economical evaluation methodology to assess the value of such an installation. A special legal entity is proposed that makes it possible for power producers to invest in this technology. We will compare two methods to calculate the price differences in a congested network. The first method uses an optimal power flow calculation to model the underlying networks and the FACTS devices in detail. The second method uses a simplified network model with aggregated generation and load in each area. The transmission network is reduced to fixed constraints between the areas.