Abstract
This manuscript presents a basic concept of nodal price modeling in a competitive electricity market and to deal with congestion, but simplify the method and have acceptable transparency so that it may correctly send an economic signal to the market participants. The nodal prices represented by locational marginal price (LMP) model-based settlement strategy are carried out in a competitive electricity market environment to establish the amount of money received by generation companies from system operator and paid to system operator from customers. This paper investigates formulation of LMP model by ignoring network losses using DC optimal power flow (DC-OPF). In this approach, LMP model represents energy price and transmission congestion cost. The implementation of the proposed method on a 3-bus system and its results are scrutinised in this paper.
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