Congestion cost allocation in deregulated electricity market

Deregulation in electricity market forces congestion in the transmission network, thereby, increasing the total costs significantly. In a monopolistic system, congestion costs were either ignored or considered under transmission charges. It is now essential to adequately charge the users responsible for congestion in the lines. This thesis investigates the allocation of congestion costs to loads and calculates incremental congestion costs for a deregulated electricity market. A novel concept of relief cost is presented to calculate the contributions of congested lines to the total congested cost. This contribution is further allocated to loads based on topological load distribution factors. Allocation of congestion costs to loads is based on proportional sharing principle. Another concept is presented to calculate the distance between congested lines and loads using distribution factors. The method proves that, the incremental congestion costs decrease as the aggregate distance between the congested lines to loads increase. It demonstrates fair cost allocation methodology. The proposed method is simulated on a simple 7-bus system and a modified IEEE system. A set of test cases are run to calculate congestion costs with variable load conditions to provide some useful insights. Also a comparative study of various transmission cost allocation methods is provided.