Real Time Pricing to Assist in Load Frequency Control

We study the use of real time prices to assist in the control of frequency and tie line deviations in electric power systems. The role of such prices, if any, would yield the practical limit to the trend in electric power systems of varying prices on ever faster time scales. The application of prices in electric power systems to increase the efficient use of resources is an established technique. The pricing schemes can be classified by time scales. Energy adjustment charges vary seasonally or monthly, while time of day rates vary two or three times per day. The power brokering system of 18 Florida Utilities operates on an hourly time scale. In a spot price market of buyers and sellers of electric power, prices adapt to system operation conditions such as changes in system lambda, the effect of generation shortages, and the effect of line overloads. The fastest spot price that has been implemented to date is 30 minutes (most implementations involve 1 hour time steps, which may be prespecified 24 hours in advance). On a five minute time scale is system lambda, a shadow price, used internally by electric utilities for economic dispatch. A key assumption of spot pricing and economic dispatch is that the power system is in quasi-steady state; i.e. power system dynamics involving frequency, voltage, etc. are ignored, and only Kirchoff´s laws for network are considered. The paper explores pricing at time scales where the quasi-steady state assumption is no longer valid.