LMP NodalBasics 2004jan14
LMP NodalBasics 2004jan14
Drew Phillips
Market Evolution Program
1
Agenda
2
What is Nodal Pricing?
§ Nodal Pricing
= Locational Marginal Pricing (LMP)
= Locational Based Marginal Pricing (LBMP)
§ IMO publishes nodal prices for information purposes; they are referred
to as shadow prices
3
What causes locational differences?
Losses
§ Due to the physical characteristics of the transmission system,
energy is lost as it is transmitted from generators to loads
§ Additional generation must be dispatched to provide energy in
excess of that consumed by load
Transmission congestion
§ Prevents lower cost generation from meeting the load; higher
cost generation must be dispatched in its place
4
Impedance, Power Flows, Losses and Limits
5
Impedance and its effect on power flows
Impedance
§ Is a characteristic of all transmission system elements
§ Signifies opposition to power flow
§ A higher impedance path indicates more opposition to power flow and
greater losses
Gen Load
Transformer
230 kV
115 kV
7
Power Flows
8
Power Flows
N Load
N
75 %
W Gen W E E Gen
25 %
S
9
What if E Gen supplies N Load?
N Load
N
75 %
W E E Gen
25 %
10
Superposition
N Load 100 MW
N
(45 + 10) 45MW
55 MW 45 MW (15 + 30)
30 MW
60 MW W Gen W E E Gen 40 MW
10 MW
90 MW 390 A
88.5 MW
500 kV
230 kV
90 MW 780 A 79.5 MW
115 kV
A Current (Amps)
• Losses are:
• proportional to Current2 x Resistance (I2R)
• lower on higher voltage lines because resistance
is lower and current flow is lower for a given MW
flow
12
Loss Comparison
L o s s e s (M W )
Current (I)
=
§ Losses are higher on a line that is heavily loaded for the same increase
in current
13
Security Limits
14
Nodal Price Examples
15
How are nodal prices derived?
§ Marginal cost is the cost of the next MW; the marginal generator is the
generator that would be dispatched to serve the next MW
• This is the basis of our current unconstrained market clearing price
§ A nodal price is the cost of serving the next MW of load at a given
location (node)
§ Nodal prices are formulated using a security constrained dispatch and
the costs of supply are based upon participant offers and bids
§ Nodal prices consist of three components:
Marginal
Nodal Marginal Marginal
Cost of
Price = Cost of + Cost of + Transmission
Generation Losses
Congestion
16
Current Pricing Scheme
$
Uniform
Price
Unconstrained
Calculation Market
Schedule
• ignores physical
Bids/ limitations
Market Offers Bids/ CMSC
IMO Offers
Participants
Constrained
Calculation Dispatch Dispatchable
resources
Schedule produce or
• considers physical
consume MWs
limitations
Nodal
Prices
17
Nodal Price Calculations
§ No Congestion or Losses
§ With Congestion
§ With Losses
Process:
§ Determine least cost dispatch to serve load
§ Determine resulting power flows to ensure security limits are
respected
§ Calculate prices by determining the dispatch for one additional
MW at each node (while still respecting all limits)
18
No Congestion or Losses
19
No Congestion or Losses: Dispatch
N Load 100 MW
Transmission Limit = 85 MW
N
75 MW 25 MW
Offer Offer
125 @ $30 W Gen W E E Gen 125 @ $35
Dispatch Dispatch
100 MW 25 MW 25 MW 0 MW
S
20
No Congestion or Losses: Node N Price
N Load 100 MW + 1 MW
Transmission Limit = 85 MW
N
$30
(75 + .75) 75.75 MW 25.25 MW (25 + .25)
Offer Offer
125 @ $30 W Gen W E E Gen 125 @ $35
Dispatch Dispatch
100 MW 25.25 MW 25.25 MW 0 MW
S (25 + .25)
+1 MW (25 + .25)
21
No Congestion or Losses: Node W Price
N Load 100 MW
Transmission Limit = 85 MW
N
75 MW 25 MW
Offer + 1 MW Offer
125 @ $30 W Gen W $30 E E Gen 125 @ $35
Dispatch Dispatch
100 MW 25 MW 25 MW 0 MW
S
+1 MW
22
No Congestion or Losses: Node E Price
N Load 100 MW
Transmission Limit = 85 MW
N
23
No Congestion or Losses: Node S Price
N Load 100 MW
Transmission Limit = 85 MW
N
24
Summary
25
Congestion, No Losses
26
Congestion (No Losses): Dispatch
N Load 100 MW
Transmission Limit = 75.2 MW
N
75 MW 25 MW
Offer Offer
125 @ $30 W Gen W E E Gen 125 @ $35
Dispatch Dispatch
100 MW 25 MW 25 MW 0 MW
S
27
Congestion (No Losses): Node N Price
N Load 100 MW + 1 MW
Transmission Limit = 75.2 MW
N
$35.50
75.2 MW 25.8 MW
Offer Offer
125 @ $30 W Gen W E E Gen 125 @ $35
Dispatch Dispatch
100 MW 24.7 MW 24.7 MW 0 MW
S
-.1 MW +1.1 MW
28
Congestion (No Losses): Node E Price
N Load 100 MW
Transmission Limit = 75.2 MW
N
75.2 MW 24.8 MW
Offer + 1 MW Offer
125 @ $30 W Gen W $33 E E Gen 125 @ $35
Dispatch Dispatch
100 MW 25.2 MW 25.2 MW 0 MW
S
+.4 MW +.6 MW
75.2 MW 24.8 MW
Offer Offer
125 @ $30 W Gen W E E Gen 125 @ $35
Dispatch Dispatch
100 MW 25.7 MW $30.50 24.7 MW 0 MW
S
+.9 MW +.1 MW
+ 1 MW
75 MW 25 MW
Offer + 1 MW Offer
125 @ $30 W Gen W $30 E E Gen 125 @ $35
Dispatch Dispatch
100 MW 25 MW 25 MW 0 MW
S
+1 MW
31
Congestion (No Losses): Summary
N Load 100 MW
Transmission Limit = 75.2 MW
N
$35.50
75 MW 25 MW
Offer Offer
125 @ $30 W Gen W $30 $33 E E Gen 125 @ $35
Dispatch Dispatch
100 MW 25 MW $30.50 25 MW 0 MW
S
32
Transmission Rights
§ N Load:
• Pays 100 x $35.50 = $3550 for energy
• Receives 100 x $5.50 = $550 for transmission rights
• Net = $3000
33
Exercise One
N Load 100 MW
N
75 MW 25 MW
Offer Offer
125 @ $30 W Gen W E E Gen 125 @ $35
Dispatch Dispatch
100 MW 25 MW
0 MW
S 25 MW
Transmission Limit = 25 MW
§ Assume the transmission limit is on line S-E (for simplicity we’ll allow
flow to equal the limit, although in reality flow must be less than the limit)
§ The load at N is being served by W Gen with flows on the transmission
system as shown
§ What are the nodal prices at N and S?
34
Exercise Answer: Node N Price
N Load 100 MW + 1 MW
N
(75 +.375 + .125) 75.5 MW $32.50 25.5 MW (25 +.125 + .375)
Offer Offer
125 @ $30 W Gen W E E Gen 125 @ $35
Dispatch Dispatch
100 MW 25 MW 25 MW 0 MW
(25 +.125 – .125) S (25 +.125 – .125)
+.5 MW +.5 MW
Transmission Limit = 25 MW
35
Exercise Answer: Node S Price
N Load 100 MW
N
(75 + .75) 75.25 MW 24.75 MW (25 - .25)
Offer Offer
125 @ $30 W Gen W E E Gen 125 @ $35
Dispatch Dispatch
100 MW 25.75 MW $30 24.75 MW 0 MW
(25 + .75) S (25 - .25)
+1 MW
+ 1 MW Transmission Limit = 25 MW
36
Losses, No Congestion
37
Losses (No Congestion): Dispatch
N Load 100 MW
N
75 MW 25 MW
Offer 78 MW Offer
125 @ $30 W Gen W E E Gen 125 @ $35
26 MW
Dispatch Dispatch
104 MW 0 MW
S
38
Losses (No Congestion): Node N Price
N Load 100 MW + 1 MW
N
75.75 MW 25.25 MW
$31.20
§ When more than one generator is on the margin, prices may be:
• higher than any offer
• lower than any offer (and could even be negative)
For additional examples see the Market Evolution Day Ahead Market web page
and in particular:
http://www.theimo.com/imoweb.pubs/consult/mep/dam_wg_2003sep16_LMPexamples.pdf
40
How the Dispatch Scheduling Algorithm (DSO)
Calculates Nodal Prices
41
Dispatch Scheduling Optimizer (DSO)
42
Calculate Nodal Prices
Marginal Cost
Marginal
Marginal Cost of of
? s of + (DFLosses
n - 1)* ? s + S a nk*µk
?n
LMP Cost
= Transmission
Generation
Congestion
43
Inputs
44
Penalty Factors
PF = 1.3 Load Z Non-dispatchable
= 23% losses PF = .97
Richview
Gen A
Gen C Gen B
PF = .95 PF = .9
PF = 1.01
= - 5.3% losses = - 11.2% losses
= 1% losses
§ Represent incremental impact on losses for generation or load at
each node based on a representative power flow distribution on
the grid
§ If PF > 1: losses are incurred for each MW delivered to Richview
§ If PF < 1: losses are reduced for each MW delivered to Richview
45
Nodal Price Calculation in DSO
• Penalty Factors
• Bids and Offers
• Forecast Load
• System Limits • Penalty Factors
• Transmission Model • Richview Nodal Price
• Load Profile • Congestion Impact
46
Reference Bus Merit Order
47
Effective Price
48
Determine Unconstrained Economic Solution
49
Introduce Physical Network
Load Z
4%
Gen D 3% 2%
4% 5%
1% 3%
Richview
6% 2%
5%
4% Gen A
Gen C 10%
Gen B
50
System Marginal Cost: No Congestion
Gen B 100 MW @ $70.7
51
Nodal Prices: No Congestion
Offer Penalty Losses Congestion Nodal
Price Factor Cost Cost Price
Gen A $75 0.90 $7.22 0 $72.22
Richview = ?s $65.00
52
Nodal Prices and Dispatch: No Congestion
$50.00
√ Gen D
$65.00
Partially dispatched
Richview
$68.42
Gen A
√ Gen C Gen B
$72.22
Fully dispatched $64.36
Offer prices:
§ Gen A $75
§ Gen B $70
§ Gen C $60
§ Gen D $50
Which generators should be dispatched?
53
Congestion
Binding Transmission Limit Load Z
Line 1
Gen D
Richview
Gen A
Gen C Gen B
54
System Marginal Cost: Congestion
55
Line 1 Transmission Limit Cost
Binding Transmission Limit Load Z
Line 1
Gen D
Richview
Gen A
Gen C Gen B
56
Line 1 Transmission Limit Cost
Load Z
+1 MW 23% losses
Gen D
Richview
- 11.2% losses
+.77 MW
Gen A
Gen C Gen B -.69 MW
57
Nodal Prices: Congestion
Offer Penalty Losses Congestion Nodal
Price Factor Cost Cost Price
Gen A $75 0.90 $7.50 0 $75.00
Richview = ?s $67.50
58
Nodal Prices and Dispatch: Congestion
Binding Transmission Limit
$50.00
√
Line 1
Gen D
$67.50
Partially dispatched
Richview
$71.05
√ Gen A
√ Gen C Gen B
$75.00
Fully dispatched $66.83 Partially dispatched
Offer prices:
§ Gen A $75
§ Gen B $70
§ Gen C $60
§ Gen D $50
Which generators should be dispatched?
59
Nodal Price Comparison
Nodal Price Nodal Price
(No Congestion) (Congestion)
60
Getting Nodal Price Information
§ Nodal prices available on IMO FTP site only (in .csv format)
§ Go to Market Data page:
• http://www.theimo.com/imoweb/marketdata/marketData.asp
§ Scroll down to hyperlink:
• ftp://aftp.theimo.com/pub/reports/PUB/
§ Select DispConsShadowPrice folder
§ Choose report date and hour i.e., Sept 20 for Hour 1:
• PUB_DispConsShadowPrice_2003092001.csv
Operating Reserve
Hour Interval Node Energy 10S/10NS/30
61