A New Algorithm for Capacity Payment in Iran Electricity Market

Considering the fact that restructuring in power systems brought up the subject of energy pricing as a very important issue in electricity markets, market designers in some countries and regions decided to pay generating units for their available generating capacities and producing electrical energy separately. Based on this design, the capacity payment guarantees the fixed costs of the generating units to be recovered because it is paid for their capacities regardless of their electricity production. In Iran electricity market, all generating units are paid for their produced energy and their available generating capacities. In this paper, a new algorithm to calculate the capacity payment is proposed and is tested on Iran electric network. Results show that the proposed method is effective and produces proper signal to valuethe unit available capacity through the different hours during a year.

Keywords:

LOLP , Capacity payment factor , Reserve , Available capacity , Market operator