CAREER: Deregulated Market for Flexible Transmission

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Achieving the United States’ climate goals requires a massive level of investment in new power transmission infrastructure. This NSF CAREER project aims to substantially reduce this need by improving the transfer capability of the existing transmission network. This will be achieved by designing new markets that provide incentive for efficient operation of flexible transmission. It is expected that such incentives will lead to enhanced utilization of the existing grid and pave the way for innovation, making the nation’s power grid more modern, flexible, resilient, and economical. The intellectual merits of the project include development of new theories and methods that enable deregulated and market-based operation of flexible transmission, as opposed to today’s regulated structure. Guided by engineering and economics principles, the project will ensure that the power flows stay within the limits, social welfare is improved, and the market is revenue adequate. The broader impacts of the project include substantial savings in avoided new transmission project costs, enhancement of the efficiency of the nation’s electric power infrastructure and offering an economical pathway to adoption of increased renewable generation. Additionally, the project includes educational and outreach activities that will provide cutting-edge training opportunities in optimization, economics, and public policy, contributing to the advancement of the nation’s workforce. Flexible transmission, including topology control, nodal voltage phase control, and line impedance control, can significantly increase the transfer capability over the existing network. Despite the availability of the technology, deployment of flexible transmission has been rather limited, mainly due to lack of incentives. This CAREER project will develop theories, methods, and algorithms to offer market-based incentives for efficient operation of flexible transmission, based on the state of the system. The project will investigate two different market designs, based on: (i) allocation of financial transmission rights, and (ii) marginal value payments. The potential for exercise of market power within each design will also be studied, which will lead to regulatory guidelines for preventing market manipulation. The efficiency of the designs will be rigorously tested based on three criteria: (i) social welfare improvement, (ii) revenue adequacy, and (iii) computational tractability. The final market design, satisfying the efficiency criteria, will enable widespread utilization of flexible transmission technologies. While the project will formulate a linear market, ensuring compatibility with existing electricity market designs, the impacts of nonlinearity in power flow equations will be thoroughly investigated.This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria.