LOCATIONAL MARGINAL PRICING IN DEREGULATED ELECTRICITY MARKET

Abstract

This work investigates the prediction of electricity price under Ioad variation in deregulated power systems. Restructuring of the power industry aims at abolishing the monopoly in the generation and trading sectors, thereby, introducing competition at various levels wherever it is possible. Congestion occurs when transmission lines or transformers are overloaded and this prevents the system operators from dispatching additional power from a specific generator. Congestion arises when one or more restrictions on the transmission system prevent the economic, or least expensive, supply of energy from serving the demand. Locational marginal pricing (LMP) is a market-pricing approach used to manage the efficient use of the transmission system when congestion occurs on the bulk power grid. Generally, the locational marginal price (LMP) is obtained by solving a linear programming formulation. Network losses are considered through the preset loss factors based on historical operation information. In this report, a new iterative LMP calculation method is proposed to overcome the aforementioned drawbacks associated with the traditional LMP calculations. At each iteration, a linear programming problem for market clearing is solved first. Losses on branches are considered as fictitious nodal demands at their terminal buses. Secondly, the AC power flow is calculated according to the dispatch results. Loss factors and fictitious nodal demands are then updated according to the AC power flow solution, thus removing the need and dependence on presetting loss factors. The performance of the proposed method has been tested with PJM 5 Bus test system, IEEE 14 Bus system and IEEE RTS 24 Bus system. It has been found that results so obtained are found to be useful and encouraging.