The scheduling risk of lossless shift factors in the ISO energy market and its resolution

This paper presents the scheduling risk of Independent System Operators in using the DC-based shift factor in modeling transmission constraints in its market optimization model while the incremental transmission losses are only accounted for in the power balancing constraint. Because of the inconsistency in incremental loss modeling, the effectiveness of resource adjustment in resolving transmission congestion is subject to distortion from a full lossy modeling. Under the condition that abundant effective adjustments are available, the distortion effect on the MW solution is minimal. However, when effective adjustment is exhausted, the distortion effect could give rise to false adjustments that have no real effect in resolving transmission congestion, posing a system reliability issue. The paper advocates the use of AC-based shift factor in the market optimization model to avoid the false adjustments between resources in market resolution.