An Approach for System Risk Assessment and Mitigation by Optimal Operation of Wind Farm and FACTS Devices in a Centralized Competitive Power Market

A high-speed degradation in the raw materials of the conventional energy sources forces the whole world toward the use of renewable energy as electrical sources. Renewable energy is not only used for fulfillment of the rapidly increased electricity demands, but also minimizes the system economic risks in competitive power markets. This paper proposes a simple and efficient approach for curtailing the system risk in the deregulated power systems. The optimal placement and operation of wind generators and flexible alternating current transmission system (FACTS) devices are determined, which ensure considerable profit and social welfare achievements by minimizing the system economical risk. Two new indices named marginal pricing index and marginal congestion index have also been proposed to identify the most critical buses and lines in terms of pricing and MVA flows, respectively. These indices help place the wind generators and FACTS devices optimally. The value-at-risk (VaR) and conditional-value-at-risk (CVaR) have also been incorporated as risk assessment tools in the considered systems. The relation between VaR and CVaR with social welfare and generation cost has also been highlighted in this work. The modified IEEE 14-bus and practical 39-Bus New England systems have been considered for validating the effectiveness of the proposed approach.