From Merit Order to Multi-Period Optimization: Unlocking Efficiency and Reliability in Pakistan's Power Grid while Quantifying Reserve Needs /

Abstract

Driven by the imperative to enhance efficiency and reliability in response to escalating demand, power network operations in developed countries have transitioned to strategic co-optimization of energy and reserves. This approach adequately tackles operational challenges arising from intermittent renewables, power consumption fluctuations, and the necessity of contingency planning for generation outages. However, developing countries generally dispatch energy by merit order of generation while maintaining reserves by experience, without optimal power flow and unit commitment modeling. This research adopts multi-period unit commitment as a co optimization strategy to achieve optimal energy dispatch and reserves schedule for Pakistan. Using the MATPOWER Optimal Scheduling Tool (MOST), the proposed strategy is demonstrated on a reduced 114-bus model of the Pakistan national grid including seasonal and hourly profiles of loads as well as hydro and wind generation. The model delivers the least cost day-ahead energy dispatch and reserves schedule for catering to credible contingencies and frequency regulation. Capacity payments for excess contracted generation are widely viewed as a drag because of their major contribution to circular debt in Pakistan. This paper offers an alternative yet balanced perspective and quantifies that about 25% of the excess generation capacity is the bare minimum spinning and regulation reserves for the reliable operation of Pakistan's national grid. The research also discovers hourly variable reserve prices as alternative pricing signals, instead of currently prevailing capacity charges, especially for future growth of the capacity market in Pakistan.