Reconfiguration requirements of Uganda's bulk power network to accommodate a wholesale electricity market

Abstract

Wholesale electricity markets are a product of electricity sector restructuring. Restructuring has been undertaken by several countries over the past thirty years for various reasons, but ultimately significant rewards have been witnessed with wholesale or retail electricity markets. In wholesale electricity markets, retailers and large-scale consumers transact directly with generators in a spot market or through contracts. These markets maximise social welfare due to the competition among market participants leading to lowering of electricity costs. Uganda currently runs a purchasing agency market where a single entity is responsible for bulk purchase and sale of electricity. The purchasing agency market however offers limited competition compared to a wholesale market. Operations of wholesale electricity markets are deeply interwoven with their physical network. This thesis seeks to establish the performance of the Uganda bulk power system if it were to operate as a wholesale competitive electricity market. This can help identify and rectify technical challenges on the network that would impact market performance. In addition, the current regulatory framework of the Uganda electricity industry was discussed, and necessary changes were highlighted to facilitate this kind of market. The market environment was simulated based on projected load data for the year 2022 obtained using the Box-Jenkins load modelling technique. The research followed a mixed research approach. Qualitative methods were applied to make a case for the Uganda electricity sector to operate under a wholesale electricity market framework while quantitative methods were used in carrying out experimental simulations of the wholesale electricity market operating on the current Ugandan power system using Power World software. Results from the study showed that system average wholesale market prices would be about 50 UGX/kWh and 290 UGX/kWh for off-peak and peak loading conditions respectively, corresponding to a 68.3% and 11.2% respective reduction from the 2019 Bulk Supply Tariff. Energy losses fell from an average of 4.3% with the current high voltage transmission dispatch system to 3.8%, translating to an 11% reduction in energy losses. These gains are attributed to the optimal dispatch of generators purely based on their cost functions and network constraints. However, transmission congestion and energy losses cost components significantly impacted electricity market prices in simulated models. This was addressed by network modifications which led to either reverting or minimisation of market prices spikes.