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FOREWORD ix <p>PREFACE xi</p> <p>ACKNOWLEDGMENT xiii</p> <p>CONTRIBUTORS xv</p> <p><b>PART I INTEGRATED SYSTEM AND MARKET OPERATION</b></p> <p><b>CHAPTER 1 BALANCE ECONOMIC EFFICIENCY AND OPERATION RISK MITIGATION 3</b><br /><i>Hong Chen and Jianwei Liu</i></p> <p>1.1 Power System Operation Risk Mitigation: The Physics 4</p> <p>1.2 Integrated System and Market Operation: The Basics 11</p> <p>1.3 Economic Efficiency Evaluation and Improvement: The Economics 20</p> <p>1.4 Final Remarks 35</p> <p>Appendix 1.A Nomenclature 36</p> <p>Appendix 1.B Electricity Market Model 37</p> <p>References 39</p> <p>Disclaimer 41</p> <p><b>CHAPTER 2 MITIGATE MARKET POWER TO IMPROVE MARKET EFFICIENCY 4</b><br /><i>Ross Baldick</i></p> <p>2.1 Introduction 43</p> <p>2.2 Price Formation in Electricity Markets 50</p> <p>2.3 Price and Offer Caps 52</p> <p>2.4 Ability and Incentive to Exercise Market Power 53</p> <p>2.5 Market Power Mitigation Approaches 57</p> <p>2.6 Conclusion 65</p> <p>Acknowledgments 65</p> <p>References 65</p> <p><b>PART II UNDER SMART GRID ERA</b></p> <p><b>CHAPTER 3 MASS MARKET DEMAND RESPONSE MANAGEMENT FOR THE SMART GRID 69</b><br /><i>Alex D. Papalexopoulos</i></p> <p>3.1 Overview 69</p> <p>3.2 Introduction 72</p> <p>3.3 Distributed Computing-Based Demand Response Management Approach 74</p> <p>3.4 The ColorPower Architecture and Control Algorithms 75</p> <p>3.5 Integration with the Wholesale Energy Market 80</p> <p>3.6 Equalizing Market Power Between Supply and Demand 83</p> <p>3.7 Generalization Beyond Demand Response 84</p> <p>3.8 A Numerical Example 87</p> <p>3.9 Concluding Remarks 88</p> <p>Appendix 3.A Nomenclature 89</p> <p>References 89</p> <p><b>CHAPTER 4 IMPROVE SYSTEM PERFORMANCE WITH LARGE-SCALE VARIABLE GENERATION ADDITION 91</b><br /><i>Yuri V. Makarov, Pavel V. Etingov, and Pengwei Du</i></p> <p>4.1 Review of Regulation and Ancillary Services 92</p> <p>4.2 Day-Ahead Regulation Forecast at CAISO 93</p> <p>4.3 Ramping and Uncertainties Evaluation at CAISO 99</p> <p>4.4 Quantifying the Regulation Service Requirements at ERCOT 103</p> <p>4.5 Conclusions 111</p> <p>Appendix 4.A Nomenclature 112</p> <p>References 113</p> <p><b>PART III STOCHASTIC APPLICATIONS</b></p> <p><b>CHAPTER 5 SECURITY-CONSTRAINED UNIT COMMITMENT WITH UNCERTAINTIES 117</b><br /><i>Lei Wu and Mohammad Shahidehpour</i></p> <p>5.1 Introduction 118</p> <p>5.2 SCUC 119</p> <p>5.3 Uncertainties in Emerging Power Systems 125</p> <p>5.4 Managing the Resource Uncertainty in SCUC 134</p> <p>5.5 Illustrative Results 155</p> <p>5.6 Conclusions 163</p> <p>Appendix 5.A Nomenclature 164</p> <p>Acknowledgments 166</p> <p>References 166</p> <p><b>CHAPTER 6 DAY-AHEAD SCHEDULING: RESERVE DETERMINATION AND VALUATION 16</b><br /><i>Ruiwei Jiang, Antonio J. Conejo, and Jianhui Wang</i></p> <p>6.1 The Need of Reserves for Power System Operation 169</p> <p>6.2 Reserve Determination via Stochastic Programming 170</p> <p>6.3 Reserve Determination via Adaptive Robust Optimization 179</p> <p>6.4 Stochastic Programming vs. Adaptive Robust Optimization 182</p> <p>6.5 Reserve Valuation 185</p> <p>6.6 Summary, Concluding Remarks, and Research Needs 191</p> <p>Appendix 6.A Nomenclature 192</p> <p>References 193</p> <p><b>PART IV HARNESS TRANSMISSION FLEXIBILITY</b></p> <p><b>CHAPTER 7 IMPROVED MARKET EFFICIENCY VIA TRANSMISSION SWITCHING AND OUTAGE EVALUATION IN SYSTEM OPERATIONS 197</b><br /><i>Kwok W. Cheung and Jun Wu</i></p> <p>7.1 Background 197</p> <p>7.2 Basic Dispatch Model for Market Clearing 198</p> <p>7.3 Economic Evaluation of Transmission Outage 201</p> <p>7.4 Optimal Transmission Switching 203</p> <p>7.5 Selection of Candidate Transmission Lines for Switching and Implementation of OTS 206</p> <p>7.6 Test Cases 210</p> <p>7.7 Final Remarks 216</p> <p>Appendix 7.A Nomenclature 216</p> <p>References 217</p> <p><b>CHAPTER 8 TOWARD VALUING FLEXIBILITY IN TRANSMISSION PLANNING 219<br /></b><i>Chin Yen Tee and Marija D. Ilíc</i></p> <p>8.1 Introduction 219</p> <p>8.2 Scale Economies of Transmission Technologies 221</p> <p>8.3 Disconnect of Current Power System Operational, Planning, and Market Mechanisms 225</p> <p>8.4 Impact of Operational and Market Practices on Investment Planning 225</p> <p>8.5 Information and Risk Sharing in the Face of Uncertainties 230</p> <p>8.6 Challenges in Designing Financial Rights for Flexibility 234</p> <p>8.7 Conclusions 235</p> <p>Appendix 8.A Nomenclature 236</p> <p>Appendix 8.B Mathematical Models Used for Case Studies 238</p> <p>Appendix 8.C Investment Cost 247</p> <p>References 248</p> <p>INDEX 251</p>

<p><b>Hong Chen, PhD,</b> is a Senior Consultant at PJM Interconnection in Pennsylvania, USA, and was a Principal Analyst in electricity market design and development at ISO New England, USA. Dr. Chen received her PhD in electrical and computer engineering, ME in power systems, and BE in power systems.  She has more than 20 years of experience within the power industry and has been active author, editor and committee leader in IEEE activities. Dr. Chen is the current chair of Power System Operation, Planning and Economics committee in the Power and Energy Society of IEEE.</p>

<p><b>Covers the latest practices, challenges and theoretical advancements in the domain of balancing economic efficiency and operation risk mitigation </b></p> <p>This book examines both system operation and market operation perspectives, focusing on the interaction between the two. It incorporates up-to-date field experiences, presents challenges, and summarizes the latest theoretic advancements to address those challenges. The book is divided into four parts. The first part deals with the fundamentals of integrated system and market operations, including market power mitigation, market efficiency evaluation, and the implications of operation practices in energy markets. The second part discusses developing technologies to strengthen the use of the grid in energy markets. System volatility and economic impact introduced by the intermittency of wind and solar generation are also addressed. The third part focuses on stochastic applications, exploring new approaches of handling uncertainty in Security Constrained Unit Commitment (SCUC) as well as the reserves needed for power system operation. The fourth part provides ongoing efforts of utilizing transmission facilities to improve market efficiency, via transmission topology control, transmission switching, transmission outage scheduling, and advanced transmission technologies. Besides the state-of-the-art review and discussion on the domain of balancing economic efficiency and operation risk mitigation, this book:</p> <ul> <li>Describes a new approach for mass market demand response management, and introduces new criteria to improve system performance with large scale variable generation additions</li> <li>Reviews mathematic models and solution methods of SCUC to help address challenges posed by increased operational uncertainties with high-penetration of renewable resources</li> <li>Presents a planning framework to account for the value of operational flexibility in transmission planning and to provide market mechanism for risk sharing</li> </ul> <p><i>Power Grid Operations in a Market Environment: Economic Efficiency and Risk Mitigation</i> is a timely reference for power engineers and researchers, electricity market traders and analysts, and market designers.</p>

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