A Zonal Capacity Market Model With Energy Storage for Transmission and Distribution

Traditional generation and transmission expansion planning has served electric utilities well for several decades to procure the least costing set of assets to meet forecasted demand. Unfortunately, it does not consider a demand curve, in which case it procures generation and transmission assets that do not ensure maximum societal value. An Incremental Capacity Auction (ICA) enables a power system to competitively procure additional generation capacity that maximizes social welfare while satisfying numerous constraints. However, typical ICA designs, zonal or otherwise, do not consider new inter-zonal transmission lines and distributed energy resources (DERs) embedded in distribution systems, promoting suboptimal solutions. To address these shortcomings, this work presents a new comprehensive ICA model that considers intra-zonal and inter-zonal constraints with provision to add new inter-zonal transmission lines and distribution system embedded DERs, while accommodating non-monotonically increasing generator capacity price bids. The proposed zonal ICA model is applied to two systems: (1) a synthetic test system with two zones; and (2) Ontario, Canada's provincial power system with six zones. The Ontario system study considers a realistic demand growth and demonstrates that the proposed zonal ICA model achieves 5.7% higher social welfare considering new inter-zonal transmission enhancements and DERs over existing single-zone methods.