Transmission congestion occurs when there is insufficient transmission capacity to simultaneously accommodate all requests for transmission service within a region or to implement least-cost dispatch. Congestion management refers to methods that are used by system operators to adjust requested or least-cost flow to ensure that scheduled flows will not exceed line capacities.
In regions without organized competitive wholesale markets, vertically integrated utilities typically manage this condition by constraining the economic dispatch of generators to avoid congestion. This means that less expensive sources of supply are scheduled at a lower-than-possible output to avoid line overloads, with the supply replaced by more expensive resources in a location that will not result in line overloads. This is sometimes called “redispatch”. When utilities allow other entities to use their lines under Open Access Transmission tariffs, flows are scheduled based on levels of contractual priority. Serving the utility’s own load is usually the highest priority. Transmission line relief (TLR) procedures allow other entities’ flows to be curtailed based on priority when necessary to avoid congestion.
In regions with organized competitive wholesale markets, such as the regions with Independent System Operators (ISOs) in the U.S., methods must be developed to ensure that redispatch results in overall optimal solutions for markets and is handled in a fair, unbiased manner. In the U.S., congestion in ISOs is managed through use of locational marginal pricing (LMP). This methodology charges a higher energy price to buyers of energy in regions where least-cost dispatch is not possible due to congestion. The LMP includes a component that accounts for the higher supply costs due to having to utilize higher-cost resources given lack of transmission capacity. The higher prices send a price signal to the market indicating where congestion occurs and provides incentives for market participants to find ways to reduce congestion such as building new transmission or new supply resources within frequently congested areas. In other regions of the world with competitive markets, congestion is sometimes managed by requiring market participants to contract for firm capacity before supply dispatch is scheduled.
The diagram above shows an example of congestion. There is a total of 1,200 MW of load to be served on this system. The least-cost dispatch, ignoring transmission constraints, would be to dispatch all four generation units on the left side of the system (800 MW) plus the $41 and $42 units on the right side (400 MW). But this would require 500 MW to travel across transmission path A. Because this path has a limited capacity of 300 MW, the $40 unit on the left cannot be scheduled, and the more expensive $48 unit on the right must be used to service the load at Node 2.