Electricity Market Security Service Pricing Based on Risk Management

With the development of the electric power industry, the power grid has gradually become a huge interconnected system in order to make economic and rational use of various resources, while at the same time improving the reliability of power system operation, but high yields are also accompanied by high risks. On the one hand, with the advent of large-scale interconnected power systems, the structure and operating modes of the systems have become increasingly complex and varied. In particular, the emergence of weak links between long-distance high-power transmission lines and systems has led to accidents and large-scale power outages. Probability; On the other hand, with the advent of large-scale interconnected power systems, faults in one place often affect the entire system. Therefore, research on safety issues has always been a focus of power system research, and security has always been applied in the operation of power systems. At the forefront, but with the deepening of the reform of the power market, the security of the power system is increasingly being pressured by economic interests. This paper attempts to study the market model and pricing of the power market security service from the perspective of risk management. 1 Risk Management Theory 1.1 The Concept of Risk The risk is an objective state of existence. The occurrence of loss is uncertain. This definition shows that the mathematical expression of the risk of objectivity, loss, and uncertainty risks is: where L is the accident loss; p The probability of an accident; R is the magnitude of the degree of risk, that is, the mathematical expectation of a risk accident loss value.

Risk can be divided into basic risk and individual risk according to its origin and influence. Basic risk refers to risk caused by non-individual, or at least individual, factors that cannot be resisted or changed by the individual. Its loss usually spreads to a wide range, such as lightning strikes. , transmission line failure, power system instability and other types of risks that exist in the power network. Individual risk refers to the risk due to individual factors, and its loss usually affects only the scope of an individual, such as fire, user equipment failure and other types of risks that exist within the individual. Since the basic risk is not under the influence of the individual, and the loss has a large impact, the basic risk should be dealt with collectively rather than by the individual. Since individual risks are usually considered within the scope of the individual, the individual should adopt preventive measures, Insurance and other tools to cope with this type of risk 1.2 Risk management Risk management is through risk identification and risk assessment, and on this basis, a comprehensive and effective use of multiple management methods and technical means to comprehensively and effectively control the risks involved in the target. In order to achieve the goal with a minimum cost security guarantee. Measures to deal with risks include: a. Avoiding the risk of prevention by avoiding risk events. The purpose is to reduce the probability of accidents.

Impairment. The purpose is to minimize the loss of accidents.

Keep it. After a comprehensive balance, it was decided to undertake the risk e transfer. Transfer risk to another entity in a certain way. If insurance is purchased, the insured will transfer the risk that may occur to the insurance company.

The above measures can be summarized as three types: prevention before accidents, derogation from accidents and remediation after accidents. Among them, avoidance and prevention belong to the pre-accident prevention measures, that is, under alternative circumstances, they avoid high-risk options and choose low-risk options. The focus of prevention is the use of various preventive measures to reduce the probability of accidents before the accident. The point is that when accidents take place, various measures are taken to prevent the further expansion of the accident to reduce the accidental loss of self-retention or shifting depends on the income of 114-2200153VCademiC J awake alElectoniC oil! A cost-effective 13. Power market column. Tang Zhenfei et al. Pricing of electricity market security services based on risk management 3.1 Power system security is a risky issue 1 Wola Li suffered 1 loss due to random equipment damages and economic benefits. Comprehensive risk management should be a comprehensive application and optimization of these measures in order to minimize the total risk cost. 1.3 Insurance and social insurance insurance is one of the measures for risk transfer, and it is also an important risk countermeasure. Insurance is divided into commercial insurance. There are two major categories of social insurance. The premise of commercial insurance is that there are a large number of independent and identically distributed risk events. Commercial insurance companies gather risks and apply the law of large numbers, so that the whole set of risks presents definitive commercial insurance. Contracts are used to transfer risks from policyholders to insurance. In the company, most people share the losses of a small number of people, such as property insurance, life insurance, etc. Due to the large impact of basic risks, the risk events show a strong commonality, so the entire risk set presents a strong randomness and does not satisfy commercial insurance. The preconditions are that general commercial insurance companies do not cover basic risks. The basic risks should be collectively dealt with. This leads to the need for social insurance. At the same time, only social insurance is conditional on the use of comprehensive risk management within the entire society. Methods Effective control of basic risks Social insurance is not for-profit, and is enforced through national legislation. All members must participate in the effort to ensure social stability, such as unemployment insurance disability insurance. Social insurance usually collects premiums in the form of taxes, and is operated by a non-profit organization designated by the state as a monopoly. It has the characteristics of non-profitability, mandatory, and universal security.

2 The theory of public goods There are areas of private goods and public goods in economics. 1J. Personal goods have two characteristics in consumption and use: First, it is competitive, if someone has already consumed a certain kind of goods (services). , it reduces the number of other people who consume the goods (services); second, it is exclusive. If someone has already consumed a certain product (service), the other person can no longer consume this product (service) market at the same time. The mechanism can only be used effectively in the occasion of private goods. The rejection of public goods means that there are no competitive or exclusive items, such as radio and television, roads, and power system stabilizers. Because of the special attributes of public goods, consumers often Underestimating or concealing their consumption of public goods, or even wanting to be a “free rider”, it is impossible to obtain the correct price-demand curve from the market, and thus the production and consumption of public goods cannot be resolved by individual decisions in the market. The government must assume the task of providing public goods. The general government collects funds through taxation, and compares the costs and benefits. Set to provide the optimal number of public goods. Social insurance is one of the ways to provide public goods.

3 Re-understanding of power system security issues The normal operating state has a certain degree of adverse impact, and it may even lead to accidents such as power outages, system loss of stability, and equipment damage. The degree to which a disturbance affects the power system depends on the nature of the disturbance, the strength, the location of the disturbance, the duration of the haste, and the various factors such as the preventive protection measures of the power system and the ability of the system to withstand the disturbance itself. The security issue is to study how disturbances affect the power system, how to prevent and reduce such adverse effects, and how to improve the ability of the power system to withstand various disturbances. It is manifested as the study of various power system safety analysis methods, security measures, and safety automation devices and other disturbances. The occurrence is random and belongs to a type of risk. Therefore, the safety problem of the power system is the risk of unsafe power system. Because the power system is a huge interconnected system, the disturbance in one place will often have an adverse effect on the entire system. Therefore, a large part of the power system security risks belongs to the basic risk category and must be resolved from the perspective of the entire power system.

The process of power system safety management is divided into the following three aspects: a. Pre-accident prevention First, through predictive accident analysis, the potential factors that may cause disturbances are prevented and controlled so as to avoid disturbances as much as possible. This kind of prevention and control measures have reasonable regulations, static dynamic predictions, accident analysis, and dispatcher's flow calculation, lightning protection, and mis-prevention devices. For those disturbances that cannot be eliminated through preventive control, the protection devices are used to isolate these disturbances so that they cannot be further expanded. For those disturbances that are not completely isolated and those that do not need to be isolated, the power system itself is subject to disturbances. The ability to absorb this type of measures to improve the ability of the system to withstand disturbances includes backup, stabilizers, PSS, and so on. If the disturbance exceeds the capacity of the system, it will lead to systemic accidents. At this time, only emergency control measures are taken to remove the fault area or equipment over a large area to avoid the collapse of the entire system. After the occurrence of a remedial accident, the fault should be corrected as soon as possible to restore the system operation. This type of measures includes the restart of the generator and the re-entry of the line. In addition, economic compensation shall also be made to market members suffering losses due to accidents. Loss of accident losses including loss of transmission/loss benefits Economic compensation is considered less in traditional power systems, but the electricity market puts forward requirements in this regard for many years. The research has resulted in the development of a large number of specific measures for the prevention of impairment and remediation and the related safety problems of automatic installations. The power system should evolve from a purely safety issue into an optimal balance between the safety and economy of comprehensive use of these safety measures. Comprehensive security risk management.

3.2 Power System Security Indicators Power system security can be described quantitatively with the magnitude of security risks: the more secure the system is.

3.3 The power system security services have the nature of public goods Because a large part of the power system security risks are basic risks, the power system security services are often focused on ensuring the safety of the entire system at the system level. The overall system security level is improved. Each user is guaranteed (although some users may not even be aware of the existence of risk), otherwise failures in one place often affect the entire system, affecting every user in the system, so the security service is for the system. All user services, each user is fair to accept the protection of security services, and thus power system security services have the nature of public goods According to the theory of public goods, the market mechanism can not effectively provide public goods, must be collective from the entire system The angle determines the optimal number of public goods available. This article envisages that an independent agency (security operator, reduced to SO) provides the security services of the power system. Its function is to comprehensively adopt various security measures for the power system based on the security assessment of the system and the appropriate market operations. Comprehensive management of security risks to ensure the security of the power system at the lowest cost 4 Electricity market security Service market model and optimal pricing 4.1 Market model for electricity market security services As the power system security problem is a risky issue, and a large part The security risk belongs to the basic risk nature, so SO can provide security service SO (or a monopoly professional insurance company under the control of SO) in a way similar to social insurance. According to the security assessment of the power system, through comprehensive security risks Management, optimizing the allocation of funds for prevention, derogation, and remedy, ensuring the safety of the power system with the lowest total premium (security service fee).

Because the security service has the nature of public goods, each user of the system will receive the security service fairly. Therefore, the security service fee (total premium) should be averagely distributed according to the total power of the system to form a user-oriented premium. Actually, the user's power bill can be used. One plus one insurance premium is charged at the same time as the electricity fee.

With security insurance, the security risk of the power system is concentrated on the SO. After members of the power market pay a certain premium, they do not need to worry about the loss caused by the security risks, and they can concentrate on the management and pursue the greatest economic benefits.

4.2 Insurance Coverage and Insurance Standards In principle, SO only requires risks that fall within the category of basic risks to be insured. For risks that belong to individual risk categories (such as user equipment failure generator failures, etc.), users voluntarily surrender themselves to SO or resolve them on their own.

Due to the different nature of users, the economic losses caused by interrupting the same amount of electricity to users are not the same. If the user’s actual loss is regarded as its insurance standard, the high-loss user insurance standard is high, and the premium paid accordingly is also high, and the contribution to the system security service is great. However, due to the public goods nature of the security service, users who pay less premium are paid. Still enjoying security services on an equal footing, it is easy to cause users to report accident losses less, and thus pay less premiums to enjoy the “free service” situation. Therefore, an appropriate level of economic loss of the user's unit power should be taken as a unified insurance. Once the standard causes power interruption due to the power system, the user will get the “economical compensation” government function of “Q (Q is the user's interrupted power), and the non-profit organization’s power market safety management is done because of the size of the premium. The insurance standards are proportional to, L is more than bookmark3 Generally, I's choice should be close to the average user's loss level, so that for the more important users, the actual power interruption loss will be greater than the insurance standard I, and its excess part should be included in the individual risk Category, by the user voluntarily to insure or resolve itself The more users receive the compensation when the power supply is interrupted, but also means that the premium charged is higher. For the average user, especially the unimportant users, excessive premiums will cause unnecessary economic burden and affect their health. Therefore, Select an appropriate insurance standard as a unified insurance standard, and treat the demand beyond this standard as its individual risk. This guarantees the universality of security and meets the requirements of users at different levels. 4.3 Economic Analysis of Security Measures The adoption of each security measure will inevitably weaken the security risk to a certain extent.The economic benefits of the security measures are: the expected amount of compensation for system accident losses; Cj is the required cost for the implementation of the security measures j, including the fixing of the relevant devices. Cost and operation and maintenance costs; P'j-, pirj+ are the probability densities of risk occurrences Rr before and after security measures j in state Xi; Qrj-, Qrj+ are in state X before adoption of security measures j After the occurrence of a risk accident, Rr, caused by the interruption of electricity; I is an insurance standard. It is clear that safety measures should be prioritized when selecting safety measures. Considering high-efficiency safety measures According to the economic benefits of the measures, the safety measures are ranked into safety measures priority list for selective implementation. Obviously, safety measures without economic benefits or negative economic benefits should be eliminated. 4.4 Optimal pricing of safety services After I, SO took out security measures from the priority list of security measures to implement the assumption that m security measures have been implemented in sequence. At this time, the total economic benefits of security measures are: the total amount of compensation; Km = + Cj, which is SO The total expenditure on security services after the first m security measures in the implementation of the security measures priority table consists of two parts. Jade, + is the priority for the adoption of security measures, so the compensation amount is expressed as a function of the total cost C of the security measures, then: The above optimization problem is minK(C), and the optimal condition is dK(C)/dC=-1 to obtain the total amount of capital investment for the optimal security measures and the minimum total expenditure on security services.

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