Integrated zonal pricing formulation in electricity market

In a competitive electricity market, generation scheduling, congestion management and prices computation should be coordinated. This paper proposes an integrated zonal pricing formulation to obtain a feasible and consecutive daily generation schedule. Different from traditional pricing formulation with single time period, time coupling constraints, such as ramp rate constraints, are taken into account. On the other hand, unsatisfactory experiences with pre-delineated zones definition method led to the development of the dynamic zones definition method. A simple and effective dynamic zones definition method based on price differences is developed. The following three steps can implement the proposed formulation. At first, a daily energy scheduling for the next 24-hour is determined. Then, zones are specified based on congestion state. Finally, generation schedules are modified on a generation payments minimizing basis to relief congestion. Numerical simulations on RTS-24 system and a practical system in China show that the proposed zones definition method is rational, and the zonal prices can improve the efficiency of power grid usage, and provide rational economic signals for generation investments.