A dual-space approach for pricing congestion in electricity markets

To deal with the pricing aspects of transmission constraint management, Independent System Operators (ISOs) use heuristic tuning of parameters in the “primal” space of the economic dispatch problem, in order to get indirectly “good” “dual” variables, i.e. prices. A method that works directly in the dual space of the economic dispatch to get prices ($/MWh), guided by the primal solution (MW) obtained from a primal formulation, is explored. Additionally, economic sensitivities are proposed, from which indicators are derived to give a complementary view of transmission constraints, to that provided by physical line flow sensitivities. Small networks are used to demonstrate the proposals.