Generalized Locational Marginal Pricing in a Heat-and-Electricity-Integrated Market

In this paper, a new pricing method derived from the heat-and-electricity-integrated market clearing problem, referred to as generalized locational marginal pricing (GLMP), is presented. The market clearing problem is formulated by the independent system operator (ISO) to coordinate the electric power system with the district heating system by considering time-delay effects in the heating transfer process. GLMP is explained as the shadow price related to the nodal electricity balance and nodal heat balance at the optimal solution. Without considering network constraints, a simplified market clearing problem is proposed to illustrate the price linkage between heating and electricity markets through combined heat and power joint costs and feasible regions. Rational generation units will behave exactly as the ISO predicts by maximizing their individual producer surplus. Then, a compact form of the complete market clearing problem is employed to derive the detailed components of GLMP, namely, the extended marginal generation component, marginal loss component, and marginal congestion component. Furthermore, time-delay effects are reflected in the pricing. Numerical results verify the validity of component classification in GLMP and demonstrate that the proposed method can promote efficiency improvements and reduce cross-subsidies.