Influence of inter area transfer capacity on the regional power system planning

Differences in energy prices between liberalized market regions are one of the elements to be considered during power system planning. The regional prices of electricity depend on the regional portfolio of generation units. In the paper one focus of the power system planning, namely the planning of interconnections, i.e. transmission network capacities for energy exchanges between market regions has been analyzed taking into account regional market prices of electricity. First the linear mathematical model of the energy exchanges between regions and the necessary input data are presented. The objective of energy exchanges is to minimize the supply costs in a selected area consisting of several neighbouring market regions. The simplex method was selected to solve the optimization problem. In the optimization process the power transfer distribution factors (PTDF) are used for the estimation of cross-border load flows. As an example, the results of investigation of an area with eight market regions are discussed in the paper. Moreover the sensitivity of market prices regarding changes of emission constraints for generation units is analyzed, using a method based on the marginal costs of energy production. Finally the recommendation for planning of interconnection is provided.