Campus Units

Economics

Document Type

Article

Publication Version

Published Version

Publication Date

2009

Journal or Book Title

Journal of Energy Markets

Volume

2

Issue

1

First Page or Article ID Number

3

Last Page

27

Abstract

Although locational marginal pricing (LMP) plays an important role in many restructured wholesale power markets, the detailed derivation of LMP as it is actually used in industrial practice is not readily available. This lack of transparency greatly hinders the efforts of researchers to evaluate the performance of these markets. In this paper, different alternating current and direct current optimal power flow models are presented to help us understand the derivation of LMP. As a byproduct of this analysis, we are able to provide a rigorous explanation of the basic LMP and LMP-decomposition formulas (neglecting real power losses) that are presented without derivation in the business practice manuals of the US Midwest Independent System Operator.

Comments

This is an article from Journal of Energy Markets 2 (2009): 3. Posted with permission.

Copyright Owner

Incisive Media

File Format

application/pdf

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