Assessment of the Norwegian transmission : pricing rules by using a modified AC-OPF

Abstract

This paper focuses on the combined effects of loss factors and zonal pricing in a system that takes as a starting point the procedures of transmission pricing in the Norwegian power system. It interprets the notion of loss factors in an AC power flow model, and develops a method for finding zonal prices consistent with a restricted AC optimal power flow. The effects of decomposing the nodal prices to find a loss factor to cover the marginal cost of losses, and letting the congestion management be resolved by zonal prices based on a DC approximation of the flows, are evaluated by comparing the resulting net prices to those of an optimal AC power flow (AC-OPF).