Locational marginal price (LMP) is an important element in the operation of electricity markets. LMP is used to determine payments in the electricity markets, to derive bidding strategies of market participants, and to make plan for new transmission lines and power plants. This paper compares the DC optimal power flow (DCOPF) model and AC optimal power flow (ACOPF) that are used to calculate LMP in the wholesale electricity market. The study takes into account the price-sensitive loads and active power reserves. DCOPF model has 2 forms: DCOPF without losses and iterative DCOPF with losses. Fictitious nodal demand (FND) is used to calculate marginal loss component of LMP. In addition, branch flow limits are also adjusted in the iterative DCOPF model. LMPs, active power outputs and reserves of generators are illustrated on a 3 bus system.
Keyword
Locational marginal prices (LMP), wholesale power markets, active power reserves, DCOPF, ACOPF, fictitious nodal demand (FND).
