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With accumulation of experiences in the operation of competitive electricity markets, it is now generally acknowledged that locational marginal pricing (LMP) is a fundamental element of robust market design that unifies the potentially conflicting drivers for physical system security and competitive market economics. This paper focuses on the fundamentals of LMP, and clarifies a few issues about the...
Prior to competitive electricity markets, transmission rights are typically physical rights which are required to schedule physical MW flows across the grid requires physical rights. To alleviate overloads, schedules may be curtailed based on the relative priority of their physical transmission rights. In the locational marginal pricing (LMP)-based congestion management scheme, energy bids are deployed,...
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