Optimal Spot Pricing: Practice and Theory

Generation scheduling and economic estimation of power systems including bilateral contracts

“…where ρ i is the LMP for real power at node n, λ is the Lagrangian multiplier associated with the supply/demand balance constraint, L is the total transmission loss, P i is the real power at node, assuming that it is positive at unit nodes and negative at load nodes, µ is the Lagrangian multiplier associated with the power flow constraint of transmission lines, Z is the real power flow of transmission lines, λ mar is the incremental fuel cost of a marginal unit, and mar is a marginal unit When a market-clearing price is set by LMP, the TAC is given by Here P i is the generator output, D j is the customer power, and R is the difference between the customer's total payment and the Genco's total income based on the electricity rate, LMP [4].…”

Distribution network spatiotemporal marginal cost of reactive power

“…Following a long discussion in the literature originating in Vickrey's work on dynamic pricing of utility services [1] and its detailed application to Electric Power [2,3], shortterm marginal-cost-based Wholesale Power Markets were introduced in England in 1990 and in the US in 1997 [4]. Competitive Wholesale Power Markets rely on participant bids and offers to discover dynamic Locational Marginal Prices (LMPs) that promote efficient and reliable service with fewer capacity reserves, provide market participants with location incentives that relieve transmission congestion, lower supply cost to consumers, and more.…”

A novel method for reactive power allocation using modified nodal equations

“…These works can be viewed as a problem of economics or as an engineering problem. An early effort by Caramanis et al [1] is based on marginal cost theory. In their work, it was suggested that the market for electricity can efficiently set location-specific prices based on instantaneous supply and demand.…”