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Long-run marginal cost pricing based on analytical method for revenue reconciliation


Reference:

Gu, C. H. and Li, F., 2011. Long-run marginal cost pricing based on analytical method for revenue reconciliation. IEEE Transactions on Power Systems, 26 (1), pp. 103-110.

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    Official URL:

    http://dx.doi.org/10.1109/tpwrs.2010.2047278

    Abstract

    Incremental and marginal approaches are two different types of methods to price the use of networks. The major difference between them is in the way they evaluate the costs imposed by network users. The former calculates network charges through simulation and the latter derives charges with a sensitivity- based analytical approach. Both charging models aim to send cost-reflective economic signals to customers, providing an economic climate for the cost-effective development of networks. In this paper, a novel long-run marginal cost (LRMC) pricing methodology based on analytical method is proposed to reflect the impacts on the long-run costs imposed by a nodal injection through sensitivity analysis. The sensitivity analysis consists of three partial differentiations: 1) the sensitivity of circuit power flow with respect to nodal power increment, 2) the sensitivity of the time to reinforce network with respect to changes in circuit power flows, and 3) the sensitivity of present value of future reinforcement with respect to changes in time to reinforce. Two test systems are employed to illustrate the principles and implementation of the proposed method. Results from incremental and marginal approaches under different system conditions are compared and contrasted in terms of charges and tariffs. The proposed method, as demonstrated in the test systems, can produce forward-looking charges that reflect the extent of network utilization levels in addition to the distance that power must travel from points of generation to points of consumption. Furthermore, the proposed method is able to provide further insights into factors influencing network charges.

    Details

    Item Type Articles
    CreatorsGu, C. H.and Li, F.
    DOI10.1109/tpwrs.2010.2047278
    Uncontrolled Keywordslong-run marginal cost, load growth rate, long-run incremental cost, network charging
    DepartmentsFaculty of Engineering & Design > Electronic & Electrical Engineering
    Publisher StatementGu_IEEE_TPS_2011_26_1_103.pdf: © 2011 IEEE. Personal use of this material is permitted. Permission from IEEE must be obtained for all other uses, in any current or future media, including reprinting/republishing this material for advertising or promotional purposes, creating new collective works, for resale or redistribution to servers or lists, or reuse of any copyrighted component of this work in other works.; Gu_IEEE_TPS_2011_26_1_103.doc: © 2011 IEEE. Personal use of this material is permitted. Permission from IEEE must be obtained for all other uses, in any current or future media, including reprinting/republishing this material for advertising or promotional purposes, creating new collective works, for resale or redistribution to servers or lists, or reuse of any copyrighted component of this work in other works.
    RefereedYes
    StatusPublished
    ID Code23086

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