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LMP NodalBasics 2004jan14

This document provides an overview of nodal pricing and how it works. It discusses the following key points in 3 sentences: Nodal pricing determines prices at different locations (nodes) on the transmission grid based on the marginal cost of supplying energy to that location, which includes the cost of energy and the cost of delivering it considering losses and congestion. The document outlines what causes locational differences in prices due to losses from transmission over impedance and congestion preventing lower cost generation. It provides examples of how nodal prices are calculated considering no losses or congestion, congestion only, and losses only to demonstrate how these transmission factors are incorporated into locational marginal prices.

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Dzikri Hakam
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0% found this document useful (0 votes)
77 views61 pages

LMP NodalBasics 2004jan14

This document provides an overview of nodal pricing and how it works. It discusses the following key points in 3 sentences: Nodal pricing determines prices at different locations (nodes) on the transmission grid based on the marginal cost of supplying energy to that location, which includes the cost of energy and the cost of delivering it considering losses and congestion. The document outlines what causes locational differences in prices due to losses from transmission over impedance and congestion preventing lower cost generation. It provides examples of how nodal prices are calculated considering no losses or congestion, congestion only, and losses only to demonstrate how these transmission factors are incorporated into locational marginal prices.

Uploaded by

Dzikri Hakam
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Nodal Pricing Basics

Drew Phillips
Market Evolution Program

1
Agenda

§ What is Nodal Pricing?


§ Impedance, Power Flows Losses and Limits
§ Nodal Price Examples
• No Losses or Congestion
• Congestion Only
– Impact of Transmission Rights
• Losses Only
§ How DSO Calculates Nodal Prices

2
What is Nodal Pricing?

§ Nodal Pricing
= Locational Marginal Pricing (LMP)
= Locational Based Marginal Pricing (LBMP)

§ Nodal Pricing is a method of determining prices in which market clearing


prices are calculated for a number of locations on the transmission grid
called nodes
• Each node represents the physical location on the transmission
system where energy is injected by generators or withdrawn by loads

§ Price at each node represents the locational value of energy, which


includes the cost of the energy and the cost of delivering it, i.e., losses
and congestion

§ 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

In both cases, the associated costs are allocated to each node in a


manner that recognizes their individual contribution to/impact on
these extra costs

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

Impedance between two points on the grid is related to:


§ Line length
§ Number of parallel paths
§ Voltage level
§ Number of series elements such as transformers

Impedance will be lower where there are:


§ Shorter transmission lines
§ More parallel paths
§ Higher voltage
§ Fewer series transformers
6
Relative Impedance and Power Flow

Gen Load

Transformer
230 kV
115 kV

Energy will flow preferentially on the 230 kV path:


• Higher voltage
• More lines in parallel
• Fewer transformers

7
Power Flows

§ Power will take all available paths to get from supply


point to consumption point
§ Power flow distribution on a transmission system is a
function of:
• Location and magnitude of generation
• Location and magnitude of load
• Relative impedance of the various paths between generation
and load

§ The following examples ignore the effect of losses

8
Power Flows
N Load
N
75 %

W Gen W E E Gen

25 %
S

§ All lines have equal impedance


§ Path W-S-E-N has three times the impedance of path W-N
§ Flow divides inversely to impedance
§ If W Gen supplies N Load, flow W-S-E-N is one third flow W-N
§ If N Load is 100 MW, 75 MW flows on path W-N, 25 MW flows on
path W-S-E-N

9
What if E Gen supplies N Load?
N Load
N

75 %
W E E Gen
25 %

§ Path E-S-W-N has three times the impedance of path W-N


§ Flow divides inversely to impedance
§ If E Gen supplies N Load, flow E-S-W-N is one third flow E-N
§ If N Load is 100 MW, 75 MW flows on path E-N, 25 MW flows on
path E-S-W-N

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

(15 – 10) 5 MW 5 MW15 MW


(15 – 10)
S

§ What if W Gen supplies 60 MW and E Gen supplies


40 MW to N Load?
§ Both W Gen and E Gen’s output will flow in proportion
to the impedance of the paths to N Load
§ Resulting line flows represent the net impact of their
flow distribution
11
Loss Comparison for 100 km Lines
90 MW 180 A 89.9 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

§ Security limits are the reliability envelope in which the


market operates
§ Power will take all available paths to get from supply
point to consumption point
§ Transmission lines do not control or limit the amount
of power they convey
§ Power flows are managed by dispatching the system
(normally via dispatch instructions and interchange
scheduling)
§ Must respect current conditions and recognized
contingencies

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

Currently calculated for information purposes only

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

§ Least cost solution would have W Gen supply all 100 MW to N


Load, based on W Gen’s offer price
§ Resultant flow is within limits
§ Nodal price is the cost of serving the next MW
§ What are the prices at each node?

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)

§ Price at Node N is the cost of supplying next 1 MW to N


§ Least cost solution would have W Gen supply the next MW to N, based
on W Gen’s offer price
§ Resultant flow would be within limits (net of existing flow and increment
to serve additional 1 MW at Node N)
§ W Gen is the marginal generator and Node N price = $30

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

§ Price at Node W is the cost of supplying next 1 MW at W


§ Least cost solution would have W Gen supply the next MW to W,
based on W Gen’s offer price
§ Resultant flow would be within limits (net flow change is zero)
§ W Gen is the marginal generator and Node W price = $30

22
No Congestion or Losses: Node E Price
N Load 100 MW
Transmission Limit = 85 MW
N

(75 + .5) 75.5 MW 24.5 MW (25 - .5)


Offer + 1 MW Offer
125 @ $30 W Gen W $30 E E Gen 125 @ $35
Dispatch Dispatch
100 MW 25.5 MW 25.5 MW 0 MW
S (25 + .5)
+1 MW (25 + .5)

§ Price at Node E is the cost of supplying next 1 MW to E


§ Least cost solution would have W Gen supply the next MW to N, based
on W Gen’s offer price
§ Resultant flow would be within limits (net of existing flow and increment
to serve additional 1 MW at Node E)
§ W Gen is the marginal generator and Node E price = $30

23
No Congestion or Losses: Node S Price
N Load 100 MW
Transmission Limit = 85 MW
N

(75 + .25) 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
S (25 - .25)
+1 MW (25 + .75)
+ 1 MW

§ Price at Node S is the cost of supplying next 1 MW at S


§ Least cost solution would have W Gen supply the next MW to S, based
on W Gen’s offer price
§ Resultant flow would be within limits (net of existing flow and increment
to serve additional 1 MW at Node S)
§ W Gen is the marginal generator and Node S price = $30

24
Summary

§ The previous examples demonstrate the method used to derive nodal


prices
§ As we would expect, the nodal prices at all nodes on a transmission
system will be the same in the absence of losses and congestion
§ Unfortunately, no such transmission system exists
§ The following examples will apply the same method to illustrate the
calculation under conditions of congestion and then losses
§ Examples:
• are not representative of how the IMO-controlled grid is dispatched
and therefore the impact on nodal prices is entirely fictitious; these
scenarios were designed to illustrate a concept while keeping the
calculation as simple as possible
• are for illustrative purposes only and do not imply a settlement basis
for a nodal pricing methodology for Ontario

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

§ Assume the transmission limit is reduced; dispatch can be solved


as in the no congestion case, but what is the effect on nodal
prices?

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

§ An increase in output of 1 MW by either W Gen or E Gen alone will


increase the W-N line flow over the limit; we must redispatch the system
using both generators
§ If we reduce W Gen output by 0.1 MW (75% of the reduction will appear
on W to N flow) and increase E Gen output by 1.1 MW (25% flows from
N to W), net effect is on line W-N is a flow increase of .2 MW
§ This is the lowest cost way to meet an additional 1 MW at N
§ Node N price = $35.50 (1.1 X $35 – 0.1 X $30)

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

§ An increase in output of 1 MW by either W Gen or E Gen alone will


increase the W-N line flow over the limit; we must redispatch the system
using both generators
§ If we increase W Gen output by 0.4 MW (50% flows from W to N) and
increase E Gen output by .6 MW (0% flows from N to W), net effect is
on line W-N is a flow increase of .2 MW
§ This is the lowest cost way to meet an additional 1 MW at E
§ Node E price = $33 (0.6 X $35 + 0.4 X $30)
29
Congestion (No Losses): Node S Price
N Load 100 MW
Transmission Limit = 75.2 MW
N

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

§ An increase in output of 1 MW by either W Gen or E Gen alone will


increase the W-N line flow over the limit; we must redispatch the system
using both generators
§ If we increase W Gen output by 0.8 MW (25% flows from W to N) and
increase E Gen output by .2 MW (25% flows from N to W), net effect is
on line W-N is a flow increase of .2 MW
§ This is the lowest cost way to meet an additional 1 MW at E
§ Node S price = $30.50 (0.1 X $35 + 0.9 X $30)
30
Congestion (No Losses): Node W Price
N Load 100 MW
Transmission Limit = 75.2 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

§ Least cost solution would have W Gen supply the next MW to W,


based on W Gen’s offer price
§ W Gen can meet the additional MW at Node W without affecting
the transmission system (net flow change is zero)
§ W Gen is the marginal generator and Node W price = $30

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

§ System is congested on line W-N


§ Combination of W Gen and E Gen redispatch is necessary to meet
incremental loads at Node N,E and S
§ If W Gen and N Load are settled at their respective nodal prices, the
difference will result in a settlement surplus
§ Surplus due to the congestion component of different nodal prices is
used to fund transmission rights

32
Transmission Rights

§ Provide a hedge against congestion charges between two locations


§ Transmission rights holders receive the difference in congestion charges
between the two locations defined by the transmission right
§ Using our example:
• Price at N - Price at W = Congestion Charge
• $35.5 - $30 = $5.50/MW
§ If N load holds 100 MW of transmission rights, they will receive
100 x $5.50 = $550

§ N Load:
• Pays 100 x $35.50 = $3550 for energy
• Receives 100 x $5.50 = $550 for transmission rights
• Net = $3000

§ W Gen is paid 100 x $30 = $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

§ W Gen cannot be used as sole supply as any increase in output will


increase the S-E line flow; must redispatch the system
§ Must increase W Gen output by 0.5 MW (25% flows from S to E) and
increase E Gen output by 0.5 MW (25% flows from E to S)
§ Resultant flow would be within limits
§ Node N price = $32.50 (0.5 X $35 + 0.5 X $30)

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

§ W Gen can be used as sole supply; the increase in output to


serve Node S will decrease the S-E line flow
§ Increase W Gen output by 1.0 (75% flows from E to S)
§ Resultant flow would be within limits
§ Node S price = $30

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

§ Least cost solution would have W Gen supply all 100 MW to N


Load due to its lower offer price, but due to losses must generate
104 MW
§ Resultant flow is within limits
§ Nodal price is the cost of serving the next MW
§ What are the prices at Node N?

38
Losses (No Congestion): Node N Price
N Load 100 MW + 1 MW
N
75.75 MW 25.25 MW
$31.20

Offer 78.9 MW Offer


125 @ $30 W Gen W E E Gen 125 @ $35
26.3 MW
Dispatch Dispatch
104 MW 0 MW
S
+1.04 MW
§ Price at node N is the cost of supplying next 1 MW
§ W Gen must generate an additional 1.04 MW to N to deliver 1 MW at
Node N
§ Resultant flow would be within limits
§ Node N price = $31.20 (1.04 X $30)
§ Prices at Nodes E and S would be similarly calculated
§ Price at Node W = $30 as an increment of load can be supplied from W
Gen with no impact to transmission flows
39
Summary

§ 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

§ Even when there is no congestion on the transmission system directly


connecting them, prices may be different between two nodes due to:
• losses and/or
• their differing impact on congested paths elsewhere in the system

§ If a generator is partially dispatched: nodal price = offer price


§ If a generator is fully dispatched: nodal price > than offer price
§ If a generator is not dispatched: nodal price < than offer price

40
How the Dispatch Scheduling Algorithm (DSO)
Calculates Nodal Prices

41
Dispatch Scheduling Optimizer (DSO)

§ Two methods are available to calculate nodal prices:


1) calculate nodal prices at each node directly (as in previous
examples)
2) calculate a reference node price then derive prices at all other
nodes

§ The DSO uses method 2 as it requires less computing power and


is faster:
• It yields the same results as method 1
• It does not matter which node is chosen as the reference bus

42
Calculate Nodal Prices

Nodal Cost of losses incurred for the


Price next MW of load at the node

Marginal Cost
Marginal
Marginal Cost of of
? s of + (DFLosses
n - 1)* ? s + S a nk*µk
?n
LMP Cost
= Transmission
Generation
Congestion

System Marginal Cost at Cost of transmission limits


Reference Node incurred for the next MW of
load at the node

43
Inputs

§ Offers and bids


§ Forecast demand for the next interval based upon a snapshot of
current demand modified by the expected +/- in the next interval
§ Load profile based upon the current system snapshot
§ Physical model of the transmission system
§ Security limits
§ Penalty Factors (losses)
• represent losses between nodes and the reference bus
• IMO uses fixed losses for each node based on historical
power flows

44
Penalty Factors
PF = 1.3 Load Z Non-dispatchable
= 23% losses PF = .97

Gen D = - 3.1% losses

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

DSO Calculation 1 DSO Calculation 2

• Richview Nodal Price • All Other Nodal Prices


• Congestion Impact
• Dispatch Instructions

46
Reference Bus Merit Order

Delivery Point Penalty Richview Equivalent


Offer/Bid Stack Factors Offer/Bid Stack

Gen A 100 MW @ $75 .90 Gen B 100 MW @ $70.7

Gen B 100 MW @ $70 1.01 Gen A 100 MW @ $67.5

Gen C 100 MW @ $60 .95 Gen D 100 MW @ $65

Gen D 100 MW @ $50 1.3 Gen C 100 MW @ $57

Subsequent calculation addresses quantity differences due to the


effect of losses

47
Effective Price

Delivery Point Penalty Richview Equivalent


Offer/Bid Stack Factors Offer/Bid Stack

Gen D 100 MW @ $50 1.3 Gen D 100 MW @ $65

If we generate 100 MW at Gen D, only 100/1.3 or 76.9 MW


shows up at Richview due to losses
100 MW at Gen D costs 100 x $50 = $5,000, which only
yields 76.9 MW at Richview, resulting in an effective price of
$5000/76.9 MW = $65 /MW

48
Determine Unconstrained Economic Solution

Richview Equivalent Current system demand +/-


Offer/Bid Stack forecast change in next interval

Gen B 100 MW @ $70.7

Gen A 100 MW @ $67.5

Gen D 100 MW @ $65


Forecast
Gen C 100 MW @ $57 Demand

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

§ Allocate forecast demand to nodes based on load profile of


current system
§ Run load flow to solve power balance using offers and bids at
appropriate nodes, physical characteristics of transmission
system and system limits
§ Determine System Marginal Cost at Richview

50
System Marginal Cost: No Congestion
Gen B 100 MW @ $70.7

Gen A 100 MW @ $67.5

Gen D 100 MW @ $65


Forecast
Gen C 100 MW @ $57 Demand

§ If power balance is solved without any need to redispatch to


respect limits; there is no congestion and the system marginal
cost will equal that determined in the purely economic merit order
i.e., Gen D will set the system marginal cost
§ System Marginal Cost (?s) = $65

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

Gen B $70 1.01 -$0.64 0 $64.36

Gen C $60 0.95 $3.42 0 $68.42

Gen D $50 1.30 -$15.00 0 $50.00

Load Z N/A 0.97 $2.01 0 $67.01

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

§ If a transmission limit on the line from Gen D prevents its


economic dispatch another more expensive resource must be
dispatched to meet demand
§ This congestion will raise the system marginal cost and affect
nodal prices throughout the system

54
System Marginal Cost: Congestion

Gen B 100 MW @ $70.7

Gen A 100 MW @ $67.5


Gen D 90 MW @ $65 Forecast
Gen C 100 MW @ $57 Demand

§ Congestion on Line 1 from Gen D: redispatch from


economic merit order to respect limit
§ System marginal cost is now set by Gen A
§ System Marginal Cost (?s) = $67.5
§ There is a cost associated with the Line 1 transmission
limit

55
Line 1 Transmission Limit Cost
Binding Transmission Limit Load Z

Line 1
Gen D

Richview

Gen A
Gen C Gen B

§ Determine transmission limit cost by relaxing constraint by 1 MW


and measuring impact on total system costs
§ Note: results are rounded on the following diagrams

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

§ Increase Gen D by 1 MW results in +.7692 MW at Richview due


to losses
§ To maintain the generation/load balance we must reduce Gen A
by .6923 MW
§ Net cost is $50 x 1 MW - $75 x .6923 MW = -$1.92

57
Nodal Prices: Congestion
Offer Penalty Losses Congestion Nodal
Price Factor Cost Cost Price
Gen A $75 0.90 $7.50 0 $75.00

Gen B $70 1.01 -$0.67 0 $66.83

Gen C $60 0.95 $3.55 0 $71.05

Gen D $50 1.30 -$15.58 -1.92 $50.00

Load Z N/A 0.97 $2.09 0 $69.59

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)

Gen A $72.22 $75.00

Gen B $64.36 $66.83

Gen C $68.42 $71.05

Gen D $50.00 $50.00

Load Z $67.01 $69.59

Richview = ?s $65.00 $67.50

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

1 6 RICHVIEW-230.G_SLACKA 36.13 1.12 0.77 0.77 DSO-RD;

Operating Reserve
Hour Interval Node Energy 10S/10NS/30

61

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