FOR TRAINING PURPOSES ONLY©COPYRIGHT NYISO 2018. ALL RIGHTS RESERVED

Locational Based Marginal PricingGina CraanManager, Market Training, NYISO

Market Overview CourseMarch 8, 2018Rensselaer, NY 12144

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Locational Based Marginal Pricing Attendees will be able to

• Explain the Basics Behind LBMP• Complete Simple LBMP Examples• Identify the Impacts of Congestion

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LBMP – The Basics

LBMP is

Cost to provide the Next MW of Load at a Specific Location in the grid

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LBMP – The Basics LBMP is established for the Day Ahead Market and the Real Time

Market• Day Ahead Market

• Security Constrained Unit Commitment (SCUC)• Hourly Prices

• Real Time Market• Real Time Dispatch (RTD)• 5 Minute Interval Prices

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CO-OPTIMIZATION FOR LOWEST TOTAL

PRODUCTION COST$

LBMP: Co-Optimized Based on Bids and Offers

NYISO ForecastLoad BidsGenerator OffersTransactionsAncillary ServicesVirtualsDemand ResponseConstraints

INPUT-BIDS AND OFFERS OUTPUT-

SCHEDULES

PRICES

NYISOSCUC/RTD

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LBMP – The Basics LBMP is made up of three components:

• Marginal Energy Price • Basic Component of LBMP, calculated at Marcy

• Marginal Loss Price• Captures Losses along path to Load

– Transmission Losses

• Marginal Congestion Price• Costlier units Dispatched to avoid exceeding Transmission Limits

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LBMP-Three Components, An Analogy

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Delivery

Associated Cost $ AmountCapital –Zone F

$ AmountNYC – Zone J

Similar to

Base price to make Billboard(cost to manufacture sign)

$40 $40 Energy Price Component(cost to produce power)

Shipping and Handling(cost to deliver the billboard)

$1 $1 Loss Price Component(cost to get energy to

destination)

Potential for added cost(cost to purchase/rent a location)

$40 $100 Congestion Price Component(cost to ensure load need is

met)

Total Cost for Product $81 $141 LBMP

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Generators – Gen Bus LBMP LBMP for Generators

• Based on Generator Bus• LBMP calculated at Bus where Generator injects power

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Gen Bus

NYSTransmission

System

FOR TRAINING PURPOSES ONLY©COPYRIGHT NYISO 2018. ALL RIGHTS RESERVED

Load Serving Entity – Zonal LBMP LBMP for Load

• Based on Zone where Load is Located• One Zonal LBMP for entire Zone• Load Weighted Average IESO

Zone O

HQZone M

ISO-NEZone N

PJMZone P

NYCA Load ZonesA- West E- Mohawk Valley I- DunwoodieB- Genesee F- Capital J- NYCC- Central G- Hudson Valley K- Long IslandD- North H- Millwood

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FOR TRAINING PURPOSES ONLY©COPYRIGHT NYISO 2018. ALL RIGHTS RESERVED

Example 1: Energy OnlyNo Losses and No Congestion

Total Load = 150 MW10

FOR TRAINING PURPOSES ONLY©COPYRIGHT NYISO 2018. ALL RIGHTS RESERVED

Gen ‘Power Up’100 MW, Bid @$20/MW

East ZoneLoad B

120 MW

West ZoneLoad A30 MW

Gen ‘Full Steam’ 150 MW, Bid @$35/MW

Gen ‘Energy’ 100 MW, Bid @$30MW

Gen ‘Lights On’ 200 MW, Bid @$40/MW

Total Load150 MW

Limit150 MW

Example 1: Energy Only

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FOR TRAINING PURPOSES ONLY©COPYRIGHT NYISO 2018. ALL RIGHTS RESERVED

Gen ‘Power Up’100 MW, Bid @$20/MW

East ZoneLoad B

120 MW

West ZoneLoad A30 MW

Gen ‘Full Steam’ 150 MW, Bid @$35/MW

Gen ‘Energy’ 100 MW, Bid @$30MW

Gen ‘Lights On’ 200 MW, Bid @$40/MW

Total Load150 MW

Limit150 MW

Example 1: Energy Only

100 MW

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FOR TRAINING PURPOSES ONLY©COPYRIGHT NYISO 2018. ALL RIGHTS RESERVED

Gen ‘Power Up’100 MW, Bid @$20/MW

East ZoneLoad B

120 MW

West ZoneLoad A30 MW

Gen ‘Full Steam’ 150 MW, Bid @$35/MW

Gen ‘Energy’ 100 MW, Bid @$30MW

Gen ‘Lights On’ 200 MW, Bid @$40/MW

Total Load150 MW

Limit150 MW

Example 1: Energy Only

100 MW

50 MW

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FOR TRAINING PURPOSES ONLY©COPYRIGHT NYISO 2018. ALL RIGHTS RESERVED

Gen ‘Power Up’100 MW, Bid @$20/MW

East ZoneLoad B

120 MW

West ZoneLoad A30 MW

Gen ‘Full Steam’ 150 MW, Bid @$35/MW

Gen ‘Energy’ 100 MW, Bid @$30MW

Gen ‘Lights On’ 200 MW, Bid @$40/MW

Total Load150 MW

Limit150 MW

Example 1: Energy Only

100 MW

50 MW

30 MW

70 MW

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FOR TRAINING PURPOSES ONLY©COPYRIGHT NYISO 2018. ALL RIGHTS RESERVED

Gen ‘Power Up’100 MW, Bid @$20/MW

East ZoneLoad B

120 MW

West ZoneLoad A30 MW

Gen ‘Full Steam’ 150 MW, Bid @$35/MW

Gen ‘Energy’ 100 MW, Bid @$30MW

Gen ‘Lights On’ 200 MW, Bid @$40/MW

Total Load150 MW

Limit150 MW

Example 1: Energy Only - Results

West Zone LBMP $30.00 East Zone LBMP $30.0015

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Gen ‘Power Up’ ,100 MW Bid $20, Paid $20

East ZoneWest Zone

Gen ‘Full Steam’ ,150 MWBid $35, Paid $0

Gen ‘Energy’ ,100 MW Bid $30, Paid $30

Gen ‘Lights On’, 200 MW Bid $40, Paid $0

Example 1: Energy Only - Results

Generators receive $30/MW (LBMP)16

FOR TRAINING PURPOSES ONLY©COPYRIGHT NYISO 2018. ALL RIGHTS RESERVED

Example 1: Energy Only - Results

Loads Charged $30/MW (LBMP)

East ZoneLoad B

120 MW

West ZoneLoad A30 MW

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Congestion Congestion occurs when the Power flow reaches the Transmission Limit

At Limit Congestion

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Congestion To maintain efficient and reliable Transmission system

• Transmission limits cannot be exceeded• When Transmission limits reached, generators from different

buses are dispatched to meet load When there is congestion, LBMPs can differ between buses

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FOR TRAINING PURPOSES ONLY©COPYRIGHT NYISO 2018. ALL RIGHTS RESERVED

Example 2: Energy and Congestion No Losses

Total Load400 MW

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Gen ‘Power Up’310 MW, Bid @$30/MW

East ZoneLoad B

360 MW

West ZoneLoad A40 MW

Gen ‘Energy’ 350 MW, Bid @$40/MW

Gen ‘Lights On’ 100 MW, Bid @$25/MW

Gen ‘Full Steam’ 350 MW, Bid @$35/MW

Total Load400 MW

Limit150 MW

Example 2: Energy and Congestion

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FOR TRAINING PURPOSES ONLY©COPYRIGHT NYISO 2018. ALL RIGHTS RESERVED

Gen ‘Power Up’310 MW, Bid @$30/MW

East ZoneLoad B

360 MW

West ZoneLoad A40 MW

Gen ‘Energy’ 350 MW, Bid @$40/MW

Gen ‘Lights On’ 100 MW, Bid @$25/MW

Gen ‘Full Steam’ 350 MW, Bid @$35/MW

Total Load400 MW

Limit150 MW

Example 2: Energy and Congestion

100 MW

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FOR TRAINING PURPOSES ONLY©COPYRIGHT NYISO 2018. ALL RIGHTS RESERVED

Gen ‘Power Up’310 MW, Bid @$30/MW

East ZoneLoad B

360 MW

West ZoneLoad A40 MW

Gen ‘Energy’ 350 MW, Bid @$40/MW

Gen ‘Lights On’ 100 MW, Bid @$25/MW

Gen ‘Full Steam’ 350 MW, Bid @$35/MW

Total Load400 MW

Limit150 MW

Example 2: Energy and Congestion

100 MW300 MW

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FOR TRAINING PURPOSES ONLY©COPYRIGHT NYISO 2018. ALL RIGHTS RESERVED

Gen ‘Power Up’310 MW, Bid @$30/MW

East ZoneLoad B

360 MW

West ZoneLoad A40 MW

Gen ‘Energy’ 350 MW, Bid @$40/MW

Gen ‘Lights On’ 100 MW, Bid @$25/MW

Gen ‘Full Steam’ 350 MW, Bid @$35/MW

Total Load400 MW

Limit150 MW

Example 2: Energy and Congestion

100 MW300 MW

40 MW260 MW

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FOR TRAINING PURPOSES ONLY©COPYRIGHT NYISO 2018. ALL RIGHTS RESERVED

Gen ‘Power Up’310 MW, Bid @$30/MW

East ZoneLoad B

360 MW

West ZoneLoad A40 MW

Gen ‘Energy’ 350 MW, Bid @$40/MW

Gen ‘Lights On’ 100 MW, Bid @$25/MW

Gen ‘Full Steam’ 350 MW, Bid @$35/MW

Total Load400 MW

Limit150 MW

Example 2: Energy and Congestion

100 MW190 MW

40 MW150 MW

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FOR TRAINING PURPOSES ONLY©COPYRIGHT NYISO 2018. ALL RIGHTS RESERVED

Gen ‘Power Up’310 MW, Bid @$30/MW

East ZoneLoad B

360 MW

West ZoneLoad A40 MW

Gen ‘Energy’ 350 MW, Bid @$40/MW

Gen ‘Lights On’ 100 MW, Bid @$25/MW

Gen ‘Full Steam’ 350 MW, Bid @$35/MW

Total Load400 MW

Limit150 MW

Example 2: Energy and Congestion

100 MW190 MW

40 MW150 MW

110 MW

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FOR TRAINING PURPOSES ONLY©COPYRIGHT NYISO 2018. ALL RIGHTS RESERVED

Gen ‘Power Up’310 MW, Bid @$30/MW

East ZoneLoad B

360 MW

West ZoneLoad A40 MW

Gen ‘Energy’ 350 MW, Bid @$40/MW

Gen ‘Lights On’ 100 MW, Bid @$25/MW

Gen ‘Full Steam’ 350 MW, Bid @$35/MW

Total Load400 MW

Limit150 MW

Example 2: Energy and Congestion- Results

West Zone LBMP =$30 East Zone LBMP =$3527

FOR TRAINING PURPOSES ONLY©COPYRIGHT NYISO 2018. ALL RIGHTS RESERVED

Gen ‘Power Up’ ,310 MW Bid $30, Paid $30

East ZoneWest Zone

Gen ‘Energy’ ,350 MWBid $40, Paid $0

Gen ‘Lights On’ ,100 MW Bid $25, Paid $35

Gen ‘Full Steam’, 350 MW Bid $35, Paid $35

Example 2: Energy and Congestion - Results

Generators West of interface receive $30/MW (LBMP)Generators East of interface receive $35/MW (LBMP)

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FOR TRAINING PURPOSES ONLY©COPYRIGHT NYISO 2018. ALL RIGHTS RESERVED

Example 2: Energy and Congestion - Results

Loads in West ZoneCharged $30/MW (LBMP)

East ZoneLoad B

360 MW

West ZoneLoad A40 MW

Loads in East ZoneCharged $35/MW (LBMP)

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© COPYRIGHT NYISO 2018. ALL RIGHTS RESERVED. FOR TRAINING PURPOSES ONLY

Let’s ReviewLBMP is the cost to provide the:

a) Last MW of Load at a specific location in gridb) Next MW of Load at a specific location in grid

LBMP is established through:a) Economic Dispatch Processb) Random Generation Selection Process

LBMP is comprised of:a) One Single Price Componentb) Three Separate Price Components

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© COPYRIGHT NYISO 2018. ALL RIGHTS RESERVED. FOR TRAINING PURPOSES ONLY

Let’s ReviewLBMP for Load is

a) Established at each LSE’s locationb) Established at a Zonal level

LBMP for Generator isa) Established at a Zonal levelb) Established at the Generator Bus

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Tariffs - OATT & MST

Day Ahead Scheduling Manual

Transmission and Dispatching Operations Manual

Market Participant User’s Guide

Technical Bulletins

Additional Resources

** Images provided by Google Images @ https://www.google.com , February 7, 2017

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