Optimal generation dispatch considering transmission congestion in electricity market with step-bidding prices

This paper presents a computational method for optimal power dispatch considering transmission congestion where the objective is to minimize the summation of step bidding prices from participated generators in electricity markets. The constraints are power balanced equations and system operating limits. The proposed method decomposes the problem formulation into two parts: the market dispatch part; and the power flow constraints part. The market dispatch part allocates the real power generations at each bus based on bidding prices with the considerations of generator capacity limits. If the dispatched real power generation of any generator were less than its minimum capacity limit, the market dispatch part would use the mixed integer programming technique to decide if that generator should be off or dispatched at minimum limit. The real power generations resulting from the market dispatch part are then passed to the power flow constraints part to check if they cause any system congestion. The market dispatch would be recomputed if any congestion occurred. The whole algorithm finds the optimal solution when the results from the market dispatch part no longer cause any transmission or operational congestion. The proposed algorithm is tested on a modified IEEE 14 bus system in which it is able to optimally redispatch the participated generators to release the transmission congestion. The proposed algorithm can be considered a practical and non-approximated approach that successfully reaches the optimal solutions of market-related optimal power flow.