Toward a New Nodal Pricing Policy of the Brazilian Transmission System Considering Multiple Hydrological Scenarios

Abstract

This paper presents a new method for allocating transmission system costs in hydro prevailing energy markets. The proposed approach is based on nodal pricing, and it considers multiple hydrological scenarios obtained from optimized energy models. These models are much closer to the operational reality of hydro dominant systems and more adequate to the transmission operation planning. The nodal pricing strategy comprises two steps to recover the total costs of the transmission system. The first one calculates the charges corresponding to the utilized network capacity, estimated at a specified operating condition, and it brings the locational signal to the tariff. In the second step, the charges related to the transmission capacity available but not used in the system are assessed by a postage stamp. This latter step accomplishes the task of recovering the total transmission charges and defining the final tariff for specific operating dispatching. On the other hand, the optimized energy models, based on stochastic dual dynamic programming, are used to minimize the operating costs while penalizing possible energy spillages. These models create monthly sequences of hydrothermal coordinated generating scenarios and dispatching conditions, which are used by the nodal pricing strategy to produce the generation/load charges and tariffs and the corresponding statistics. The proposed method, combining the nodal pricing strategy and the optimized energy model, is applied to a Brazilian network configuration and the results are fully discussed. Moreover, probabilistic analyses are also performed to describe the annual costs of transmission of thermoelectric and hydroelectric plants and industrial electrointensive consumers installed in different areas of the network.