Presents a detailed and in-depth introduction to the economic and technical foundations of modern electricity markets operating with locational marginal price (LMP).

Based on the author’s graduate-level course and written to fill the gap in the market for a book that not only describes the fundamentals of LMP but also the most up-to-date research. It analyses the planning and operation of an electricity markets cleared through locational marginal prices (LMPs). Microeconomic background is provided, also a number of decision-making models relevant for electricity market operations and for long-term planning. These models are related to the market operator and to the market agents. After an introduction to power system economics and market operations, the book covers the fundamentals in Microeconomics in Chapter Two. Power market architecture and the fundamentals of locational marginal price (LMP) are presented in detail next. Chapter Five discusses advanced models for LMP. Market power and bidding strategy is looked at in the middle of the book, then LMP in practices. The last chapter covers market-based integrated planning for generation and transmission.

• Presents a detailed and in-depth introduction to the economic and technical foundations of modern electricity markets operating with locational marginal price (LMP), the key to understanding today’s market operation
• Covers the important topics of transmissions and financial transmission rights (FTR), planning issues, and the relation to renewable sources
• Includes various illustrative examples and end-of-chapter problems for use as homework exercises
• Companion website holds a link to the author’s own page which includes further research in power markets and LMP, class projects, MATLAB code and an solutions manual

Essential reading for Senior undergraduate students and graduate students in electrical power engineering, smart grid and renewable energy, as well as Professionals, practicing engineers and analysts in power utilities and independent system operators (ISO) who would like to understand how LMPs are calculated.