Supply reliability cost assessment in a generation market

This paper presents an approach for the supply reliability cost allocation and system operation in partly liberalized generation market. In the proposed method, Expected Unserved Energy is selected to evaluate the system operation as an index of supply reliability. In liberalized generation market, which includes many generation companies and customers, it is a significant issue to keep the supply reliability of the customers. Furthermore, there will be customers that desire much higher supply reliability than the supply reliability of the pool market. When the customer who desired to improve its reliability directly contracts the generation company, which has higher reliability, changes come to the supply reliability of the whole system. Additional cost to recover the supply reliability is evaluated and allocated to the customer with bilateral contract. Several numerical simulations illustrate the effectiveness of proposed method. (C) 2004 Elsevier Ltd. All rights reserved.