Bilateral transactions impact voltage stability and nodal pricing in power networks

Abstract

This study investigates the impact of bilateral transactions on voltage stability and nodal pricing in the Indian power grid using a modified IEEE 30-bus system. A high voltage direct current (HVDC) link is integrated into the network to enhance control and system flexibility. Two advanced transmission pricing mechanisms— megawatt (MW)-Mile and megavolt-ampere (MVA)-Mile—are employed to allocate costs based on power flow magnitude and distance. The analysis incorporates hybrid AC-DC optimal power flow (OPF) modeling under various transaction levels. Simulation results show that a 100 MW bilateral transaction reduces the voltage at the receiving bus (bus 28) by 2% (from 1.05 to 1.03 p.u.) and increases the nodal price by 6.25% (from ₹4.80 to ₹5.10/kWh). The use of HVDC technology reduces total generation cost by approximately 8.2% (from ₹85 lakhs to ₹78 lakhs) and decreases real power loss from 70 MW to 50 MW. These findings confirm that bilateral transactions influence voltage profiles and market pricing. Moreover, MW-Mile and MVA-Mile methods demonstrate effective cost allocation capabilities. The proposed approach offers a practical framework for improving grid reliability and economic transparency in evolving power markets.