Different models and properties on LMP calculations

This paper introduces the fundamental concept of locational marginal price (LMP) in the electricity markets, and presents some special observations on LMP. Under market environment, LMP based settlement strategy is used to determine the amount of money earned from ISO by the energy sellers and paid to ISO by the energy buyers. Thus, depending on different market designs, four different calculation models and corresponding properties on LMP are discussed in this paper. Some interesting applications of LMP are also presented. In this paper, all studied examples are based on a simple 3-bus network