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A New Approach to Calculation of the Components of Locational Marginal Price  

Lee Ki-Song (건국대학 전기공학과)
Jeong Yun-Won (건국대학 전기공학과)
Shin Joong-Rin (건국대학 전기공학과)
Kim Jin-Ho (건국대학 전기공학과)
Park Jong-Bae (건국대학 전기공학과)
Publication Information
The Transactions of the Korean Institute of Electrical Engineers A / v.55, no.8, 2006 , pp. 341-350 More about this Journal
Abstract
This paper presents a new methodology to draw the components of locational marginal price (LMP) in electricity market. Recently, the changing environments surrounding electricity industries resulted in the unbundled services provided by electricity market players, which may require the new pricing mechanisms based on the LMP. The changed pricing mechanisms will provide the price signals of time and location to the market participants. Most of the existing studies of LMP are based on the Lagrangian multipliers as shadow prices to evaluate the equivalent values of constraints or factors for security, reliability and quality. However, the shadow prices cannot provide enough information for components of LMP. In this paper, therefore, we proposed a new approach that LMP is divided into three components. To do this, we first present the method for shadow prices calculation and then break down LMP into a variety of parts corresponding to the concerned factors. The proposed approach is applied to 5-bus and modified IEEE 14-bus sample system in order to verify its validity.
Keywords
Locational Marginal Price; Shadow Price; Components of Locational Marginal Price; Marginal Loss Factor;
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