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COURSE SUMMARY
“Locational Marginal Pricing” is a one-day course that explores nodal pricing
in electric power markets. There are no math or technical prerequisites for this
class; however, the class assumes a general knowledge of electricity markets.
The class describes the basics of marginal clearing prices in an offer-based economic dispatch market, transmission constraints, hedging
of energy and transmission price variation, and market
power. (For a technical introduction to Locational Marginal Pricing at the graduate
level, see my University of Texas course: Locational Marginal Pricing.)
Topics covered are:
1. Offer-based economic dispatch
- Block prices for energy offers,
- Demand and demand bids,
- Dispatch and pricing:
- Two generator example;
- Three generator example
- Incentives from pricing rule,
- Variations,
- Additional issues.
2. Hedging energy price risk.
- Financial versus physical bilaterals,
- Contracts for differences to hedge price variation.
3. Transmission considered.
- Transmission constraints:
- One line example,
- Three generator, four line example,
- Locational marginal pricing (LMP),
- Congestion rental and congestion cost,
- Properties of LMPs,
- Commercial network model,
- Losses.
4. Hedging transmission price risk.
- Variation of LMPs,
- Financial Transmission Rights (FTRs):
- One line example,
- In combination with CfDs,
- Acquiring FTRs,
- Revenue adequacy,
- Flowgate rights,
- Option FTRs.
5. Other topics.
- Virtual bidding,
- Market power,
- Market power mitigation.
The course consists of approximately seven hours of lectures. The lectures are presented using approximately 200 Power Point slides. There are several exercises throughout the day to help explain and reinforce the presentation material. Each attendee receives a hard copy of the presentation in a three-ring binder.
This course can be presented at your company site. It is taught by Dr. Ross Baldick, Professor in the Department of Electrical and Computer Engineering at The University of Texas at Austin. Dr. Baldick certifies that this activity has been approved for MCLE credit in the states of California, Ohio, Pennsylvania, and Virginia.
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