Impact of FACTS devices on transmission pricing in a de-regulated electricity market

Transmission pricing has been an important issue in the ongoing debate about power system restructuring and deregulation. The purpose of pricing is to recover cost of transmission, and encourage efficient use and investment. This paper utilizes location based pricing concepts and has suggested a nonlinear programming problem formulation to determine real and reactive power prices, with an objective to maximize the net social welfare within the system constraints. The paper also demonstrates the ability of FACTS devices to reduce the overall operating cost and their impact on transmission pricing. Two types of FACTS devices have been considered viz. static VAr compensator (SVC) and thyristor controlled series compensator (TCSC). The concepts introduced in the paper have been investigated on a modified IEEE 14-bus system.