OPTIMIZATION-BASED INTER-UTILITY POWER PURCHASES

Power transactions are important activities among electric utility com panies. Effective transaction decisions can result in significant savi ngs since marginal generation costs of neighboring utilities could be quite different. Transactions, however, are coupled with the schedulin g of units through system demand and reserve requirements, and are con fined by many accustomed rules. How to make effective transaction deci sions is therefore a very difficult problem. In this paper, an optimiz ation-based method for the integrated consideration of power purchase transactions and the scheduling of thermal units is presented based on the augmented Lagrangian decomposition and coordination method. After the system-wide demand and reserve requirements are relaxed by using Lagrange multipliers and penalty coefficients, the overall problem is decomposed into purchase and thermal subproblems. For a purchase subpr oblem, the optimal purchase level for each purchase interval is first determined. The subproblem is then efficiently solved by using the dyn amic programming approach without discretizing purchase levels. Therma l subproblems are solved by extending our previous method recently rep orted in the literature. The multipliers and penalty coefficients are then updated at the high level so that system demand and reserve requi rements are gradually satisfied over iterations. The augmented Lagrang ian decomposition and coordination method avoids the solution oscillat ion difficulties associated with linear cost functions of purchase sub problems and speeds up algorithm convergence. Numerical testing result s based on modified Northeast Utility's data show that the, algorithm is efficient, and significant savings can be obtained.