| China faces the challenging task of substantially increasing its generation of electricity within economic, energy, political, and environmental constraints. Some of the most immediate issues are the decentralization of the utility decision making process, the creation of electricity markets over large geographic areas, the establishment of pricing mechanisms, and the maintenance of reasonable levels of air quality.; This research develops a multi-regional optimization model to analyze these issues in the North China Power System. The model minimizes the total delivery cost of electric power for a multi-regional grid subject to the constraints of power flow, generation and transmission capacities and emission limits. Benders' decomposition is used to decompose the model into a two-level structure an inter-regional Power exchange module and an intra-regional power dispatch and transmission module The intra-regional market contains the least cost power dispatch based on bids from generators bidding and on users, insurance of their power consumption, all within local emission limits. The inter-regional market balances power exchange among regions.; The results indicate that a decentralized, competitive electricity market has significant economic and environmental benefits to the entire region. Regional competition brings more cheap electric power from remote regions to urban demand centers. The expansion of power exchange reduces sulfur emissions without significantly increasing cost. The results demonstrate that without congestion, the nodal and transmission prices can be effectively separated, an important criterion for decentralization and competition. Transmission prices are related only to the wire and topological characteristics of the network. The effects of electricity loop flow on transmission prices are reflected through a multiplier that is specific to each loop. A priori calculation of the congestion and loop multipliers under congestion is possible with information on the location of congestion and marginal production costs. |
