Paper Title

Locational Marginal Pricing - Review Survey

Presented By
Akshay Nanwatkar

College
Priyadarshini Indira Gandhi College of
Engineering
Locational Marginal Price (LMP)

The locational marginal price at a specific

location is the sum of the cost of generating the
next MW to supply load at a specific location
(based on marginal generation cost), the cost of
transmission congestion, and the cost of losses.
Need for Transmission Pricing
 Unbundling of the Vertically Integrated Utility.
 Separation of generation of activity from
transmission.
Transmission owner becomes separate entity.
Transmission owner should recover its sunk cost
plus revenue for expansion.
 Issue becomes complicated because of peculiar
nature of electric power.
 Demand and supply has to be balanced out on real
time basis.
Electric power can not be routed through desired
path.
This paper reviews the existing developments in
locational marginal transmission pricing.

Diverse schemes and approaches on optimal

power flow, locational marginal price,

 Artificial Intelligence based day ahead

forecasting, Available transfer capability
prediction based locational pricing, Financial
transmission rights hedging locational marginal
price
 Different Reviews Methods for Locational
Marginal Pricing

1)Optimal Power Flow based Locational Marginal

Price
2)Artifical Neural Network based Pricing
3)Available Transfer Capability based Pricing
4)Financial Transmission Rights hedging locational
marginal pricing
 1)Optimal Power Flow based Locational Marginal
Price
Proposed a more accurate method to
incorporate the steady state security constraints
into OPF, which allowed to consider the reactive
power and voltage constraints in outage cases.

Security constraints are added to the AC-Power

Flow via their penalty functions (first to
introduce) and Lagrange multipliers, to obtain the
optimum operating conditions
 2)Artifical Neural Network based Pricing
This paper focuses on Locational Marginal Price (LMP)
that efficiently maintains power markets by alleviating
transmission network congestion. There are complicated
behaviors of the time series due to uncertain factors in
the power markets.

The proposed method makes use of the hybridization

of GP (Gaussian Process) of hierarchical Bayesian
estimation, EPSO (Evolutionary Particle Swarm
Optimization) of evolutionary computation and fuzzy c-
means of allowing data to belong to two or more clusters
 3)Available Transfer Capability based Pricing
The application of Differential Evolution (DE) to
compute the Total Transfer Capability (TTC) in
deregulated market is proposed in this paper. The
objective is to maximize a specific point-to-point
power transaction without violating system
constraints
There are various deterministic mathematical
techniques for available transfer capability (ATC)
calculations. They are continuation power flow
method (CPF) repeated power flow (RPF) method,
optimum power flow method , dc load flow-based
method and power transfer distribution factor (PTDF)
methods
4)Financial Transmission Rights hedging locational
marginal pricing

A shift from zonal to nodal pricing improves the

efficiency of system operation. However, resulting
price changes also shift surplus across generation
and loads at different locations. As individual
actors can lose, they might oppose any reform.
 CONCULSION
This paper has tried to review all the available
publications in the area of locational marginal price.
Much deeper insight to the allied areas like optimal
power flow, available transmission capability,
artificial neural network based day ahead forecasting
and financial transmission rights are provided and
are concluded with a review on various applications
of LMP.
A summary of the available techniques, algorithms
and various test system data’s which can be retrieved
from literatures are described for the easy rescue of
researchers