UT Power Engineering Laboratory - "Powering the Future"

Marginal Loss Pricing in Power Market


Rui Bo
Fangxing Li


Location marginal pricing is now gaining widely acceptance in both academy and industry. It may be decomposed into three components: energy price, loss price and congestion price. The calculation of LMP and its components could be done in quite a few ways. Much of the work is done through ACOPF based economic dispatch program. However, regarding the speed and convergence problems that ACOPF may encounter, we propose DCOPF based approaches to calculate LMP and its three components.

One of the major challenges lies in the fact that power loss is basically ignored in the DC representation of power system power flow. However, power loss must be addressed in order to valuate the loss component of LMP. So a new DCOPF model with power loss considered is proposed and the formulation for calculating LMP component is derived. Furthermore, solving algorithms are developed, which is expected to be superior to AC based algorithms in terms of the speed and convergence performance. In addition, since DC power flow adopts a couple of assumptions and could therefore cause errors in results, the accuracy of the results got from proposed DCOPF approach should be carefully studied and the working area of the approach should also be identified. These are what we are working on now.

Curve for Market Low Pricing

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