MEng Electrical and Electronic Engineering / Course details

1. Introduction to optimisation and optimal economic system operation

i)   Introduction to power system economics: electricity as a commodity and trade-off between economical and secure supply (1 lecture)

ii)  Introduction to nonlinear optimization concepts and Karush-Kuhn-Tucker (KKT) conditions (1 lecture)

iii) Introduction to economic dispatch, KKT solution, and interpretation of Lagrange multipliers (2 lecture)

iv) Introduction to unit commitment (1 lecture)

2. Electricity markets and power system economics

i)   Foundations of microeconomics: Supply and demand; price elasticity; surplus; social welfare; market equilibrium; theory of the firm; fixed cost, marginal cost, average cost (2 lectures

ii)  Introduction to risk: Definition; price risk management and contracts; principles of portfolio design (1 lecture)

iii) Industry restructuring: Objectives; unbundling; market players; basic structures: pool, bilateral and mixed (1 lecture)

iv) Electricity marketplaces: Forward and spot (balancing) markets; power exchanges; generation scheduling; two-settlement system (1 lecture)

v)  Participation in electricity markets: producers, retailers, customers, hybrid participants (2 lectures)

vi) Network effects: Locational marginal pricing; transmission losses and constraints; transmission rights (3 lectures)

3. Concepts of power system security

i)   Supply and demand balance over different timeframes: ancillary services in a market environment and concept of (N-x) security (2 lectures)

ii)  Optimal power flow and DC approximation (2 lectures)

4. Power system investment

i)   Generation investment: Drivers for capacity expansion and retirement; risks (1 lecture)

ii)  Transmission investment: Costing and pricing of transmission networks; value of transmission; need for regulation; approaches to transmission pricing (4 lectures)

The unit aims to introduce the student to the operation of power systems. The emphasis is placed on the need to balance the desire to operate (as well as plan) as economically as possible with the need to maintain the security of the system. In order to do so in a market context, the unit also gives an understanding of the economic principles underlying the introduction of competition in the supply and retail of electricity as well as the opening of the transmission and distribution systems to third party access.