Determination of Optimal Failure Reserve Based on Economic Equivalent in Power Market

Because in competitive electricity market the power generation companies, power grid companies and load service entities belong to different economic bodies respectively, so that in the system operation, planning and design the consideration of the factors impacting system security and reliability is obviously different from those in traditional power systems. The economic equivalent of security and reliability measure is based on the difference of the economic profits brought by the security and reliability measure and the cost needed by the implementation of the security and reliability measure. This paper proposes that, in power market environment, the power interruption acceptable to both supply and demand sides should be regarded not as damage to secure and reliable operation, but as continuity of power supply. In this point of view, the paper proposes that the optimal failure reserve capacity (in economic sense) in power market environment should be determined in light of cost of failure reserve capacity and load-shedding. Finally, the rationality of the model and the feasibility of the algorithm developed here are demonstrated by taking the IEEE LTS 11-machine 6-node power system as an illustrative system. The economic equivalent gives an entirely new way for economic determination of power system security and reliability