1. Application of Locational Marginal Pricing for Transmission Congestion Management in the Proposed Power Industry Reform in Nigeria P. A. Kuale and J. Tsado University of Benin, Benin City J. C. Ekeh Ambrose Alli University, Ekpoma Third NSF Workshop on US-Africa Research and Education Collaboration Abuja, Nigeria, December 13-15, 2004

2. Kuale/Ekeh Third US-Africa Research and Education Collaboration Workshop Abuja, Nigeria, December 13-15, 2004 2 Outline 1.Objectives 2.Existing Market Structure 3.Proposed Nigerian Power Industry Reform 4.Consequences of Reform 5.Review of Loadflow Studies 6.Findings

3. Kuale/Ekeh Third US-Africa Research and Education Collaboration Workshop Abuja, Nigeria, December 13-15, 2004 3 Outline 7.Concepts of Locational Marginal Pricing (LMP) and its Impact on the Proposed Electricity Reform 8.Applications 9.Conclusions and Future Work

4. Kuale/Ekeh Third US-Africa Research and Education Collaboration Workshop Abuja, Nigeria, December 13-15, 2004 4 Objectives Review of the state-of-the-art of the loadflow studies of the transmission lines under existing and proposed IPPs Identification of critical nodes/buses Define LMP and it can be used to check transmission congestion

5. Kuale/Ekeh Third US-Africa Research and Education Collaboration Workshop Abuja, Nigeria, December 13-15, 2004 5 Consequences of Reform 1.Increase of reliability of power supply 2.Overall increase in power consumption 3.Increase in competition among generating plants 4.The results of (2) and (3) could result in congestion 5.The consequence of (4) could result in different energy prices throughout the network 6.Adoption of appropriate pricing policies to check transmission congestions

6. Kuale/Ekeh Third US-Africa Research and Education Collaboration Workshop Abuja, Nigeria, December 13-15, 2004 6 Congestion Management Reschedule system generation The use of locational marginal pricing Other methods: postage-stamp rate, contract path, MW-mile, ATC, etc

7. Kuale/Ekeh Third US-Africa Research and Education Collaboration Workshop Abuja, Nigeria, December 13-15, 2004 7 Findings Shiroro-Kaduna line was overloaded by 18.65% Ajaokuta busbar exceeds max acceptable voltage of 1.05 pu – the bus voltage was 1.062 pu Shiroro and Afam GS exceeded their Var limits – the values were 2.60 and 1.59 pu, respectively

8. Kuale/Ekeh Third US-Africa Research and Education Collaboration Workshop Abuja, Nigeria, December 13-15, 2004 8 Findings Jebba GS and Delta GS absorb min Var of -2.0 pu and -2.49 pu, respectively Kaduna (0.9025 pu), Kano (0.8268 pu), Jos (0.7858 pu), and Gombe (0.6397 pu) all recorded low voltages There is the need for appropriate pricing mechanism for transmission congestion management

9. Kuale/Ekeh Third US-Africa Research and Education Collaboration Workshop Abuja, Nigeria, December 13-15, 2004 9 Locational Marginal Pricing The LMP is the spot price which is based on the principle that a unit of power has different prices at different points in the network. The main reason for this spatial discrimination in energy prices are transmission losses and congestion LMP is defined as the minimum cost of supplying one additional MW of load as the load bus without violation of any transmission limits, based on the bidding prices of power supply and power load at the buses in the system The major factors affecting the LMP values are generator bid prices, transmission system elements that are experiencing congestions, the losses in the system, and the electrical characteristics of the system

10. Kuale/Ekeh Third US-Africa Research and Education Collaboration Workshop Abuja, Nigeria, December 13-15, 2004 10 Locational Marginal Pricing Usefulness of LMP 1.To calculate the revenue of GENCOs for supplying electric power and the expenditure of DISCOs for using electric power 2.It can be used for the transmission congestion management 3.It can be used for transmission network planning to improve the secure operation network of the power system 4.To guide TRANSCOs’ capital investments

11. Kuale/Ekeh Third US-Africa Research and Education Collaboration Workshop Abuja, Nigeria, December 13-15, 2004 11 Applications of LMP At the Shiroro GS busbar/node – this will take care of the Shiroro-Kaduna line, Kaduna-Kano line, Kaduna-Jos line, and Jos-Gombe line At the Ajaokuta load bus because of the max acceptable voltage of 1.05 pu was exceeded.

12. Kuale/Ekeh Third US-Africa Research and Education Collaboration Workshop Abuja, Nigeria, December 13-15, 2004 12 Conclusions and Future Work The existing system is weak to cope with the proposed electric power reform LMP will help to alleviate transmission congestions The above will save the grid from high losses, occasional trippings, voltage as well as system instability