Modelling and analysis of competitive electricity market in Bhutan

Examensarbete för masterexamen
Master Thesis
Yangdon, Pema
The power sector deregulation process has taken place over the past three decades world-wide with the objectives being more choices available to the customers and increased social welfare. Bhutan is also considering deregulating its own power sector in the near future with the pressure to reduce electricity costs to the customers. This thesis therefore aims at developing a preliminary proposal for a competitive electricity market for the Bhutan’s existing power system and also presenting various technical requirements for the market to function properly. In this proposal, complete market models for competitive generators are developed and tested using PowerWorld Simulator. The models simulate the day-ahead electricity markets for two basic market pricing structures: uniform market pricing (mostly used in Europe) and locational marginal cost based pricing (LMP) (mostly used in North America). The market models are able to facilitate competitions among generators, calculate total generation costs, market clearing prices, costs of system securities, etc. The study of the market analysis tried to compare the outcomes from the proposed competitive markets to those of the existing system. The results have shown that the price of electricity reduces comparatively in the proposed competitive market. The average market price came down by 21% (including the existing wheeling charge) for uniform market pricing market and 13% in LMP based market as compared to the existing system 0.182 SEK/kWh. The network loss calculated taking supply-demand balance in the existing system is 14.7% and the loss reduces to 4.54 % with the new market models. The total generation cost was found reduced in the competitive market as compared to the existing systems. The day-ahead spot market for both winter and summer loads showed very small or almost no changes in price for hourly variation of load in both uniform and LMP based market. It can be concluded the uniform market pricing structure could be appropriate for the current power systems in Bhutan since it’s power network had no problem of transmission congestion and it would remain so even for certain load growths in the future. However, the LMP-based market has other advantages over network treatments incorporated in the market settlement itself and can be more beneficial in the long-run. The study has also pointed out the various technical requirements for a market to functions, namely ancillary services for network management, power balancing, etc. The issues of privatization of power generating companies and separation from network companies have also been discussed. A complete long-range study taking into account all sorts of generations and ancillary services costs would therefore be needed to make a final choice.
Elkraftteknik , Electric power engineering
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