The Effect of Regional Differential Electricity Rate System using LMP (Locational Marginal Price)

doi:10.15266/KEREA.2024.33.3.203

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2024 Vol.33, Issue 3 Next Page

Research Paper

The Effect of Regional Differential Electricity Rate System using LMP (Locational Marginal Price) LMP(Locational Marginal Price) 방식에 의한 지역별 차등 전기요금 제도의 효율성 분석: 송재도*
Jaedo Song*; *전남대학교 경영대학 경영학부 교수, 단독저자(e-mail: sjaedo@chonnam.ac.kr)

*Professor, College of Business Administration, Chonnam National University, Sole author (e-mail: sjaedo@chonnam.ac.kr)

30 September 2024. pp. 203-239

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Abstract

The introduction of a regional differential electricity rate system is being discussed, and the LMP (Locational Marginal Price) method is mentioned as a promising alternative. Under this background, this study analyzed a mathematical model and suggests that the LMP method produces results that maximize social welfare. The analysis was conducted separately for long-term decision-making where transmission capacity can be expanded, and for short-term decision-making in which transmission capacity is given. The analysis for short-term decision-making was conducted for peak load situations where capacity is insufficient and for non-load situations with spare capacity. The results of the analysis suggested that the price to maximize social welfare is equal to the marginal power generation cost by region, and the difference in marginal cost by region reflects the value lost due to transmission loss and compensation for transmission network investment. In addition, if the transmission capacity is less than the optimal capacity, the compensation for transmission network investment exceeds the incremental cost, providing an incentive to invest in the transmission network. If the transmission capacity exceeds the optimal capacity, the compensation for transmission network investment becomes lower than incremental cost or zero and the investment is not recovered, suppressing the investment in transmission networks. The results are the same as the LMP method suggests, and this means that this method maximizes social welfare and provides an optimal transmission network investment signal. The above analysis results contribute to understanding the characteristics of LMP. In addition, this study discussed what changes are needed in the electricity market when introducing the LMP concept.

Keywords

Differential rate by region

Locational marginal price

Peak-load

Location selection incentive

Time of use tariff

Transmission network

지역별 차등 전기요금 제도의 도입이 논의되고 있으며, 그 방법론으로 LMP(Locational Marginal Price) 방식이 유력한 대안으로 언급되고 있다. 이런 배경하에서 본 연구는 수리모형을 통해 LMP 방식이 사회후생을 극대화하는 결과를 도출함을 제시한다. 분석 결과 사회후생 극대화 가격은 지역별 한계발전비용과 동일하며, 지역별 한계비용의 차이는 송전손실에 의해 사라지는 가치와 송전망 투자에 대한 보상을 반영한다. 그리고 송전용량이 최적 용량 미만인 경우 송전망 투자에 대한 보상액은 증분비용을 초과하여 송전망 투자의 유인이 제공된다. 반면 송전용량이 최적 용량을 초과할 경우 송전망 투자에 대한 보상액은 증분비용보다 낮아지며 용량이 상당히 큰 경우 0이 되어 투자액이 회수되지 않고 송전망 투자가 억제된다. 이는 LMP 개념하에서의 송전망 투자 보상 방식과 동일하며, 이 방식이 사회후생 극대화 및 최적 송전망 투자 시그널을 제공함을 의미한다. 이상의 분석결과는 LMP의 특성을 이해하는 데 기여하며, 추가로 본 연구에서는 LMP 개념의 도입 시 전력시장에 어떤 변화가 필요한지를 논의하였다.

키워드

계시별 요금

입지선정 유인

전송망

지역별 차등요금

지역한계가격

최대부하

References

김상훈‧이광호, “손실을 고려한 전력시장 균형점과 손실계수 적용에 관한 연구”, 「대한전기학회 하계학술대회」, 2007.
김승완, “효율적인 전력설비 투자 유도를 위한 송배전망 이용요금 규제방식 연구”, 산업통상자원부, 2022.
박명덕, “합리적 송전망 비용회수 방안 연구”, 에너지경제연구원, 2015.
안재균, “효과적인 분산형 전원 보급 및 활용을 위한 송배전요금제 도입방안 연구”, 에너지경제연구원, 2021.
안재균, “효과적인전력망구축을위한비가공증설대안(NWAs) 모색”, 제58회전기의날기념특별포럼, 2023.
이상엽‧이창호‧임동순‧석광훈‧최영웅, “재생에너지 확산 이행방안 연구(II)”, 한국환경연구원, 2021.
이철휴, “계통 안정화를 위한 미래 전력망 구축방안”, 제58회 전기의 날 기념 특별포럼, 2023.
정성훈‧민경일‧문영현, “거래전략을 고려한 LMP(Locational Marginal Price) 산정”, 「2009년도 대한전기학회 전력기술부문회 추계학술대회 논문집」, 2009.
Crew, M. A., C. S. Fernando, and P. R. Kleindorfer, “The Theory of Peak-load Pricing: A Survey,” Journal of Regulatory Economics, Vol. 8, 1995, pp. 215~248. 10.1007/BF01070807
González-Cabrera, N., J. Torres-Jiménez, J. García-Guzmán, J. Serrano-Rubio, and J. Rodríguez-Rodríguez, “Reliability Nodal Pricing Considering CO₂ Emissions in a Multi Objective Function,” IEEE Latin America Transactions, Vol. 17, No. 10, 2019, pp. 1616~1624. 10.1109/TLA.2019.8986439
Harvey, S., and W. Hogan, Locational Marginal Prices and Electricity Markets, NYISO FERC Submission(17, October), 2022.
Hausman, E. P., D. W. Peterson, and B. Biewald, RPM 2006: Windfall Profits for Existing Base Load Units in PJM—An Update of Two Case Studies, Prepared for Pennsylvania Office of Consumer Advocate, 2006 (Available at www.synapse-energy.com).
Hogan, W. W., “Contract Networks for Electric Power Transmission,” Journal of Regulatory Economics, Vol. 4, 1992, pp. 211~242. 10.1007/BF00133621
Hogan, W. W., Electricity Market Design: The Value of FTRs, Platts 11th Annual Nodal Trader Conference, Proceeding, New York, NY, 2018.
Hogan, W. W., Fred Schweppe Meets Marcel Boiteux: Transmission Pricing, in Thomas-Oliver Léautier: Inperfect Markets and Imperfect Regulation: An Interoduction to the Microeconomics and Political Economy of Power Markets, Chap. 6, MIT Press, 2019.
Hogan, W. W., Market-based Transmission Investments and Competitive Electricity Markets. Center for Business and Government, John F. Kennedy School of Government, Harvard University, Cambridge, Massachusetts, 1999, 02138.
Li, H., L. Tesfatsion, “ISO Net Surplus Collection and Allocation in Wholesale Power Markets under Locational Marginal Pricing,” IEEE Transactions on Power Systems, Vol. 26, No. 2, 2011, pp. 627~641. 10.1109/TPWRS.2010.2059052
NationalGridESO, Net Zero Market Reform: Phase 3 Assessment and Conclusions, 2022.
Pollitt, M. G., Locational Marginal Prices (LMPs) for Electricity in Europe? The Untold Story, Energy Policy Research Group, University of Cambridge, 2023.
Read, E. G., and D. P. M. Sell, Pricing and Operation of Transmission Services: Short Run Aspects. Report to Trans Power, Canterbury University and Arthur Young, Clirist Church. New Zealand, 1988. 10.
Read, E. G., Pricing of Transmission Services: Long Run Aspects. Report to Trans Power, Canterbury University, Christ Church, New Zealand, 1988. 10.
Sarfati, M., M. R. Hesamzadeh, and P. Holmberg, Production Efficiency of Nodal and Zonal Pricing in Imperfectly Competitive Electricity Markets, Energy Policy Research Group, University of Cambridge, 2019. 10.2139/ssrn.3644259
Schweppe, F. C., M. C. Caramanis, R. D. Tabors, and R. E. Bohn, Spot Pricing of Electricity, Norwell, MA: Kluwer Academic Publishers, 1988. 10.1007/978-1-4613-1683-1
Sioshansi, R., R. O’Neil and, S. Oren, “Economic Consequences of Alternative Solution Methods for Centralized Unit Commitment in Day-ahead Electricity Markets,” IEEE Transactions on Power Systems, Vol. 23, No. 2, 2008, pp. 344~352. 10.1109/TPWRS.2008.919246
Tang, W., and R. Jain, “Game-Theoretic Analysis of the Nodal Pricing Mechanism for Electricity Markets,” 52nd IEEE Conference on Decision and Control, December 10-13, 2013. Florence, Italy.
Tesfatsion, L., “Locational Marginal Pricing: A Fundamental Reconsideration,” Journal of Power and Energy, 11(January), 2024, pp. 104~116. 10.1109/OAJPE.2024.3361751

Information

Publisher :Environmental and Resource Economics Review
Publisher(Ko) :자원 · 환경경제연구
Journal Title :자원·환경경제연구
Journal Title(Ko) :Environmental and Resource Economics Review
Volume : 33
No :3
Pages :203-239
DOI :https://doi.org/10.15266/KEREA.2024.33.3.203

[1] 김상훈‧이광호, “손실을 고려한 전력시장 균형점과 손실계수 적용에 관한 연구”, 「대한전기학회 하계학술대회」, 2007.

[2] 김승완, “효율적인 전력설비 투자 유도를 위한 송배전망 이용요금 규제방식 연구”, 산업통상자원부, 2022.

[3] 박명덕, “합리적 송전망 비용회수 방안 연구”, 에너지경제연구원, 2015.

[4] 안재균, “효과적인 분산형 전원 보급 및 활용을 위한 송배전요금제 도입방안 연구”, 에너지경제연구원, 2021.

[5] 안재균, “효과적인전력망구축을위한비가공증설대안(NWAs) 모색”, 제58회전기의날기념특별포럼, 2023.

[6] 이상엽‧이창호‧임동순‧석광훈‧최영웅, “재생에너지 확산 이행방안 연구(II)”, 한국환경연구원, 2021.

[7] 이철휴, “계통 안정화를 위한 미래 전력망 구축방안”, 제58회 전기의 날 기념 특별포럼, 2023.

[8] 정성훈‧민경일‧문영현, “거래전략을 고려한 LMP(Locational Marginal Price) 산정”, 「2009년도 대한전기학회 전력기술부문회 추계학술대회 논문집」, 2009.

[9] Crew, M. A., C. S. Fernando, and P. R. Kleindorfer, “The Theory of Peak-load Pricing: A Survey,” Journal of Regulatory Economics, Vol. 8, 1995, pp. 215~248. 10.1007/BF01070807

[10] González-Cabrera, N., J. Torres-Jiménez, J. García-Guzmán, J. Serrano-Rubio, and J. Rodríguez-Rodríguez, “Reliability Nodal Pricing Considering CO₂ Emissions in a Multi Objective Function,” IEEE Latin America Transactions, Vol. 17, No. 10, 2019, pp. 1616~1624. 10.1109/TLA.2019.8986439

[11] Harvey, S., and W. Hogan, Locational Marginal Prices and Electricity Markets, NYISO FERC Submission(17, October), 2022.

[12] Hausman, E. P., D. W. Peterson, and B. Biewald, RPM 2006: Windfall Profits for Existing Base Load Units in PJM—An Update of Two Case Studies, Prepared for Pennsylvania Office of Consumer Advocate, 2006 (Available at www.synapse-energy.com).

[13] Hogan, W. W., “Contract Networks for Electric Power Transmission,” Journal of Regulatory Economics, Vol. 4, 1992, pp. 211~242. 10.1007/BF00133621

[14] Hogan, W. W., Electricity Market Design: The Value of FTRs, Platts 11th Annual Nodal Trader Conference, Proceeding, New York, NY, 2018.

[15] Hogan, W. W., Fred Schweppe Meets Marcel Boiteux: Transmission Pricing, in Thomas-Oliver Léautier: Inperfect Markets and Imperfect Regulation: An Interoduction to the Microeconomics and Political Economy of Power Markets, Chap. 6, MIT Press, 2019.

[16] Hogan, W. W., Market-based Transmission Investments and Competitive Electricity Markets. Center for Business and Government, John F. Kennedy School of Government, Harvard University, Cambridge, Massachusetts, 1999, 02138.

[17] Li, H., L. Tesfatsion, “ISO Net Surplus Collection and Allocation in Wholesale Power Markets under Locational Marginal Pricing,” IEEE Transactions on Power Systems, Vol. 26, No. 2, 2011, pp. 627~641. 10.1109/TPWRS.2010.2059052

[18] NationalGridESO, Net Zero Market Reform: Phase 3 Assessment and Conclusions, 2022.

[19] Pollitt, M. G., Locational Marginal Prices (LMPs) for Electricity in Europe? The Untold Story, Energy Policy Research Group, University of Cambridge, 2023.

[20] Read, E. G., and D. P. M. Sell, Pricing and Operation of Transmission Services: Short Run Aspects. Report to Trans Power, Canterbury University and Arthur Young, Clirist Church. New Zealand, 1988. 10.

[21] Read, E. G., Pricing of Transmission Services: Long Run Aspects. Report to Trans Power, Canterbury University, Christ Church, New Zealand, 1988. 10.

[22] Sarfati, M., M. R. Hesamzadeh, and P. Holmberg, Production Efficiency of Nodal and Zonal Pricing in Imperfectly Competitive Electricity Markets, Energy Policy Research Group, University of Cambridge, 2019. 10.2139/ssrn.3644259

[23] Schweppe, F. C., M. C. Caramanis, R. D. Tabors, and R. E. Bohn, Spot Pricing of Electricity, Norwell, MA: Kluwer Academic Publishers, 1988. 10.1007/978-1-4613-1683-1

[24] Sioshansi, R., R. O’Neil and, S. Oren, “Economic Consequences of Alternative Solution Methods for Centralized Unit Commitment in Day-ahead Electricity Markets,” IEEE Transactions on Power Systems, Vol. 23, No. 2, 2008, pp. 344~352. 10.1109/TPWRS.2008.919246

[25] Tang, W., and R. Jain, “Game-Theoretic Analysis of the Nodal Pricing Mechanism for Electricity Markets,” 52nd IEEE Conference on Decision and Control, December 10-13, 2013. Florence, Italy.

[26] Tesfatsion, L., “Locational Marginal Pricing: A Fundamental Reconsideration,” Journal of Power and Energy, 11(January), 2024, pp. 104~116. 10.1109/OAJPE.2024.3361751

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