Forecasting locational marginal pricing in deregulated power markets

This investigation focuses on development of new methodologies for implementing power systems optimization for forecasting Location Marginal Prices (LMP) in deregulated electricity markets. The proposed approach uses the LMP method [1-3] to show relationships between generator bids, power system constraints, and electricity demand. The proposed approach uses Unit Commitment, Economic Dispatch, and Optimal Power Flow to perform load flow analysis that includes LMP calculation to determine price of electricity. This paper includes the main part of the investigation that addresses integration of locational marginal pricing within the traditional structure of optimization constraints including economic constraints, operational and security constraints including system real power balance, unit operating limits, transmission flow limits, interface limits, and contingency constraints. The integration of LMP and the constraints of optimization outlined in this paper may serve as a foundation for inclusion of environmental constraints, system spinning reserve constraints, and system operating reserve constraints in the future. We test the proposed algorithm to analyze a 6-bus system. The proposed method is the basis for present investigation of on-line data collection, monitoring, and price forecasting for a real-size power system.