Effects of locational marginal price on electricity market with distributed generation

Abstract

A method to calculate the locational marginal price (LMP) and its cost components of electricity in a power network with distributed generation (DG) was proposed. The cost components include energy cost, marginal loss cost and marginal congestion cost. The values of these cost components can provide the correct price signals for the choice of site for distribution generation. Through a six-bus study case, and by altering the data input to simulate system changing conditions, the results of the proposed method clearly demonstrate the changing values of the cost components.