Evaluating the Impact of Offering Prices on LMP: An Analytical Method

Locational marginal price (LMP) is the basis of power markets; the impact of offering prices of power plants on LMP is cared by merchant participants, market operators, and policy makers. This paper investigates the impact of offering prices, which appear in the objective function of market clearing...

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Bibliographic Details
Published in:2025 7th International Conference on Power and Energy Technology (ICPET) pp. 918 - 923
Main Authors: Guo, Zhongjie, Bai, Jiayu, Chen, Shutong, Wang, Rui
Format: Conference Proceeding
Language:English
Published: IEEE 04.07.2025
Subjects:
Analytical models
Computational modeling
Linear programming
LMP
Load flow
multi-parametric programming
OPF
Partitioning algorithms
Power generation
Power markets
Programming
Vectors
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Summary:Locational marginal price (LMP) is the basis of power markets; the impact of offering prices of power plants on LMP is cared by merchant participants, market operators, and policy makers. This paper investigates the impact of offering prices, which appear in the objective function of market clearing optimal power flow (OPF), on system LMPs. Based on multi-parametric programming theory, it is proven that LMPs are piecewise affine functions of offering prices these coefficients in the objective function; then, a dedicated algorithm is developed to retrieve the analytical expressions of LMP functions by solving the OPF problem at some sampled coefficients. The proposed approach is validated on the modified PJM 5-bus system and IEEE 118-bus system.
DOI:10.1109/ICPET66029.2025.11160418