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PJM©2017 7/13/2017
Agenda
• LMP Components
• 5 Bus Model
• Shadow Prices
• Statistics
• LMP Simulation Demo
PJM©2017 2 7/13/2017
What is LMP?
PJM©2017 3 7/13/2017
How does PJM Use LMP?
PJM©2017 4 7/13/2017
Locational Marginal Price
System Marginal
Congestion
Marginal Loss
Component
Price Component
PJM©2017 5 7/13/2017
Locational Marginal Price
System Marginal
Congestion
Marginal Loss
Component
Price Component
PJM©2017 7 7/13/2017
Control Actions
System Reconfiguration
Transaction Curtailments
Redispatch Generation
PJM©2017 8 7/13/2017
When Constraints Occur...
PJM©2017 9 7/13/2017
Security Constrained Re-Dispatch
Control Area
Constrained System
Low Cost
Generator
$$ High Cost Generator
$$$$
PJM©2017 11 7/13/2017
Constraints & Marginal Units
PJM©2017 12 7/13/2017
Locational Marginal Price
System Marginal
Congestion
Marginal Loss
Component
Price Component
PJM©2017 14 7/13/2017
What would you expect to see?
30 miles
• LMP Components
• 5 Bus Model
• Shadow Prices
• Statistics
• LMP Simulation Demo
PJM©2017 16 7/13/2017
LMP Examples
5-Bus Model Examples
PJM©2017 17 7/13/2017
Example # 1 - 5 Bus Transmission Grid
Generator Offers System Loads = 669 MW
System Losses = 17 MW Sundance
600 MW 200 MW
$10/MWh 230 MW
E Thermal Limit D $40/MWh
Brighton
223 MW
A
Alta Solitude
223 MW
110 MW B 223 MW C 520 MW
Park City $30/MWh
$14/MWh 100 MW
$15/MWh
PJM©2017 18 7/13/2017
Example # 1 - 5 Bus Transmission Grid
Dispatch & Energy Flow System Loads = 669 MW
System Losses = 17 MW
230 MW Sundance
E Thermal Limit D
Brighton 200 MW
225 $40/MWh
600 MW 152 PF = 1.0247
375
223 MW
149
600 MW 305 77
$10/MWh A
PF = 1.0625 86 MW
Alta Solitude
223 MW 223 MW 520 MW
Park City B C $30/MWh
110 MW 100 MW PF = 1.0000
$14/MWh $15/MWh
PF = 1.0492 PF = 1.0492
PJM©2017 19 7/13/2017
LMP Calculations
149
223 MW
600 MW 305 77
A
86 MW
$10/MWh Solitude
PF = 1.0625 Alta
LMP = $14.00 223 MW 223 MW 520 MW LMP = $14.69
Park City B C $30/MWh PF = 1.000
110 MW 100 MW
Marginal Unit
$14/MWh $15/MWh
PF = 1.0492 PF = 1.0492 Reference Bus
PJM©2017 22 7/13/2017
Agenda
• LMP Components
• 5 Bus Model
• Shadow Prices
• Statistics
• LMP Simulation Demo
PJM©2017 23 7/13/2017
Binding Constraints and Shadow Prices
PJM©2017 24 7/13/2017
Shadow Price
$60 $90
Area 1 Area 2
G1 G3 ON
ON
ON G2
Limit = 400MW
ON G4
OFF G5
PJM©2017 25 7/13/2017
Shadow Price
$60 $90
Area 1 Area 2
G1 G3 ON
ON
ON G2
Limit = 401MW
ON G4
OFF G5
PJM©2017 26 7/13/2017
Shadow Prices
PJM©2017 27 7/13/2017
LMP Components
System
Energy
Price = System Energy Price
System
Energy
Price x Marginal loss
Sensitivity factor = Marginal Loss Component
ConstraintA
Shadow Price x DFAXA
= Congestion ComponentA
LMP
PJM©2017 28 7/13/2017
System Energy Price X * 1.0 = System Energy Component
System Energy Component $33.11 X 1.0 = $33.11
Marginal Loss
System Energy Price X Sensitivity Factor = Marginal Loss Component
Loss Component $33.11 X -0.0315 = ($1.04)
LMP = $39.23
• Which constraints does raising unit output help?
• Which constraints does raising unit output hurt?
• Is close to center of system load?
• Bonus Question – How many marginal units does this system have?
PJM©2017 29 7/13/2017
System Energy Price X * 1.0 = System Energy Component
System Energy Component $33.11 X 1.0 = $33.11
Marginal Loss
System Energy Price X Sensitivity Factor = Marginal Loss Component
Loss Component $33.11 X -0.0315 = ($1.04)
LMP = $39.23
• Which constraints does raising unit output help? Constraints A,C and D
• Which constraints does raising unit output hurt? Constraint B
• Is close to center of system load? No
• Bonus Question – How many marginal units does this system have? 5
PJM©2017 30 7/13/2017
Example # 2 - 5 Bus Transmission Grid
Constrained System Loads + Losses = 921
230 MW
E Thermal Limit D Sundance
Brighton 200 MW
$40/MWh
600 MW Load = 300 MW
$10/MWh A
Alta Solitude
110 MW
B C 520 MW
Park City $30/MWh
$14/MWh 100 MW Loads = 300 MW
$15/MWh
PJM©2017 31 7/13/2017
Example # 2 - 5 Bus Transmission Grid
Dispatch Solution Ignoring Thermal Limit System Loads = 900 MW
System Losses = 21 MW
230 MW
Dispatched E Thermal Limit D
at 600 MW 200 MW
258 $40/MWh
Brighton
193 Sundance
342
144
300 MW
600 MW 355 48
$10/MWh A Dispatched
110 MW
Alta Solitude
300 MW 300 MW 520 MW
110 MW
$14/MWh
Park City B C $30/MWh
100 MW
Dispatched $15/MWh
at 110 MW Dispatched
PJM©2017 100 MW32 7/13/2017
Example # 2 - 5 Bus Transmission Grid
Actual Dispatched Generation System Loads = 900 MW 200 MW
System Losses = 15 MW $40/MWh
Dispatched 230 MW Sundance
E Thermal Limit D
at 509 MW
230 224
Brighton
509 MW 279 178
278
180
102
300 MW
600 MW 110 MW 308
A 3
100 MW
$10/MWh 101
196 MW
Alta Solitude
300 MW 300 MW Dispatched 520 MW
110 MW at 196 MW $30/MWh
$14/MWh
Park City B C
100 MW
Dispatched
$15/MWh
at 110 MW Dispatched
PJM©2017
at 100 MW33 7/13/2017
Calculate Shadow Price and Congestion Price
Production Cost calculated using a DC Power Flow Solution
Production Cost with 230 MW across Production Cost with 231 MW across Brighton
Brighton - Sundance line - Sundance line
Unit MW Price No Load Production Cost Unit MW Price No Load Production Cost
Brighton 485 10 $399.80 $5,249.80 Brighton 488 10 $399.80 $5,279.80
Alta 110 14 $100.00 $1,640.00 Alta 110 14 $100.00 $1,640.00
Park City 100 15 $100.00 $1,600.00 Park City 100 15 $100.00 $1,600.00
Solitude 205 30 $100.00 $6,250.00 Solitude 202 30 $100.00 $6,160.00
Sundance 0 40 $100.00 $0.00 Sundance 0 40 $100.00 $0.00
900 $14,739.80 900 $14,679.80
PJM©2017 34 7/13/2017
Example # 2 – Summary
Offer Price Penalty Adjusted System Loss Price Congestion Total LMP
Factor Offer Energy Price Price
Unit
(Shadow Price * DFAX)
• LMP Components
• 5 Bus Model
• Shadow Prices
• Statistics
• LMP Simulation Demo
PJM©2017 36 7/13/2017
2015 PJM State of the Market Report - LMP
PJM©2017 37 7/13/2017
2015 PJM State of the Market Report - LMP
PJM©2017 38 7/13/2017
2015 PJM State of the Market Report - LMP
PJM©2017 39 7/13/2017
Agenda
• LMP Components
• 5 Bus Model
• Shadow Prices
• Statistics
• LMP Simulation Demo
PJM©2017 40 7/13/2017
Questions?
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PJM©2017 41 7/13/2017