LMP Modeling, Analysis and Forecasting
November 30-Dec 1, 2021 | Online :: Central Time
“This course is exactly what I was looking for to better understand price formation and dispatch in the electricity market. The speaker is the only industry expert who addresses this topic in such complete detail.” Associate, EDF Renewables
“Great way to learn how LMPs are calculated.” Rates and Policy Director, Northwest Requirements Utilities
“This course provided the insights into price formations that has taken my understanding to the next level.” Market Operations Engineer, ERCOT
This course examines the value of understanding and forecasting electricity prices in the wholesale markets. The information will benefit anyone who deals with current and future locational marginal prices (LMPs) in wholesale electric markets by providing a deeper understanding of what drives them: 1) the complexity of supplying electrical energy around the clock 2) across an imperfect transmission grid, 3) from a variety of suppliers 4) without benefit of large-scale storage or rationing. It addresses itself to wholesale power market participants who confront these questions:
- How should I price ‘market risk’ in my proposed project?
- Why is my existing project suffering and what can I do about it?
- What makes a credible LMP forecast?
The content will cover guidance about forecasting prices – with or without sophisticated modeling tools – in the face of new policies, an evolving resource mix and changing market rules. Emphasis will be placed on describing U.S. locational marginal pricing (LMP) style markets. Going beyond the traditional three-bus LMP example, attendees will learn how the market forms prices in the real world. Attendees will become familiar with how this knowledge supports decision-making, trading and negotiation. Following a review of LMP formation, real-world situations will be dissected using publicly-available data. Finally, some solved “what-if” examples will illustrate the impact on LMPs of emerging bulk power developments using a simplified market model. For those attendees who want to understand what some people call “magic”, an optional related workshop is dedicated to exposing the mathematics that solve for “what-if” examples.
Using real-world situations and illustrative examples, this instructional course will:
- Examine the fundamental drivers of electricity prices (supply, demand and transmission network)
- Review the value and use of price forecasts for multiple market conditions and products
- Illustrate locational marginal price (LMP) formation with examples
- Assess the LMP dynamics of unit commitment – how the market chooses which suppliers to buy from
- Explain the LMP dynamics of economic dispatch – how the market decides how much to buy from each supplier
- Identify how different resources are offered into the markets
- Review input data for fundamentals-based forecasting (market mimicking)
- Explain the LMP distinctions between modeling “day ahead” (DA) and “real time” (RT) markets
Tuesday, November 30, 2021 : Central Time
8:45 – 9:00 a.m.
Log In and Welcome
12:45 – 1:30 p.m.
9:00 a.m. – 5:00 p.m.
9:15 – 10:15 a.m. :: Value and Uses of Price Forecasts
- Impact of market rule changes (loss pricing, extended LMP, subsidies)
- Evolving resource mix (renewables, storage, coal retirement, etc.)
- Generation bidding (gas nomination, water release, etc.)
- ISO transmission plans (Adjusted Production Cost)
- Elective Transmission Upgrades
- Generation investment and retirement decisions
- PPA negotiation (CfD, basis, curtailment, negative LMP risks)
- Trading (physical, virtual, speculative)
- Financial Transmission Rights (FTR /TCR / TCC/ CRR)
- Regulatory & Legislative (Market reform debate)
10:15 – 10:30 a.m. :: Electricity Supply, Demand and Transmission Market Basics
- Day-ahead (DA) markets
- Real-time (RT) markets
- Congestion hedging and virtual trading
10:30 – 10:45 a.m. :: Break
10:45 – 11:20 a.m. :: Solving Five Problems Leads to Prices
- Demand forecasting
- Unit commitment
- Economic dispatch
- Operating reserves
- Power flow
11:20 a.m. – 12:00 p.m. :: Locational Marginal Prices
- Marginal energy
- Marginal loss
- Marginal congestion
- Shadow prices
- Shift factors
12:00 – 12:45 p.m. :: Locational Marginal Prices (cont’d)
12:45 – 1:30 p.m. :: Group Luncheon
1:30 – 3:00 p.m. :: Developing a Realistic Dispatch on a Simple Network
- Energy and reserves, perfect grid
- Energy-price hedges
- Transmission congestion
- Security constraints (“N-1” on top of “N-0”, “flowgates”)
3:00 – 3:15 p.m. :: Break
3:15 – 4:30 p.m. :: Real World Examples
- Understanding LMPs through published data
- California ISO (CAISO)
- Midcontinent ISO (MISO)
- Southwest Power Pool (SPP)
- PJM Interconnection (PJM)
- New York ISO NYISO)
- ISO New England (ISO-NE)
- Electric Reliability Council of Texas (ERCOT)
4:30 – 5:00 p.m. :: Distribution of Homework Assignments
- Introduction and discussion
5:00 p.m. :: Course Adjoins for Day
Wednesday, December 1, 2021 : Central Time
8:45 – 9:00 a.m.
9:00 a.m. – 12:15 p.m.
9:00 – 10:00 a.m. :: Dispatch Accounting for Losses
- Loss factors and the marginal loss component
10:00 – 10:30 a.m. :: Worked Examples Using the Simple Network (solutions only)
- Impact of higher fuel price (e.g., natural gas)
- Impact of new transmission build (example: public policy transmission)
- Virtual bids and offers
10:30 – 10:45 a.m. :: Morning Break
10:45 – 11:15 a.m. :: Worked Examples (cont’d)
- Impact of carbon tax
- Impact of high renewable energy penetration
- Price spikes and negative prices
- Extended LMP
- Block-loaded resources
- Fast start resources
11:15 – 11:45 a.m. :: Real-World Case Studies
- Applications of forecasting LMPs
11:45 a.m. – 12:15 p.m. :: Challenges of Forecasting
- Statistical versus fundamental models
- What to expect from various assumptions
- Generation expansion and retirement
- Fuel prices
- Transmission constraints
- Declining demand
- Long-term LMP forecasting — fact or fiction?
- Benchmarking hints
- Questions to ask consultants!
12:15 p.m. :: Course Adjourns
The Mechanics of Calculating LMPs
Wednesday, December 1, 2021 : Central Time
This workshop is dedicated to exposing the mathematics for solving “what-if” examples, for those attendees who want to understand what some people call “magic”. It is complementary to the primary course, converting the principles and practices into specific scenarios.
Workshop attendees are encouraged to have a laptop equipped with the Excel Solver add-in.
Using real-world situations and illustrative examples, this workshop will:
- Examine the fundamental drivers of electricity prices (supply, demand, transmission network)
- Review LMP calculation methods
- Reinforce understanding through experiments using an optimization model
12:45 – 1:00 p.m.
1:00 – 4:45 p.m.
1:00 – 4:45 p.m. :: Workshop Timing
- Unit commitment
- Co-optimization of energy and reserves
- Approximate solution by Lagrangian Relaxation
- Solution by linear programming
- Interactive model in MS Excel
4:45 p.m. :: Workshop Adjourns
Nicholas Pratley has 30 years of experience in power systems engineering and analysis, including 12 years simulating wholesale power markets in the U.S., Canada and Europe. His clients have included transmission owners, municipal utilities, electric co-ops, generation developers and power traders. He holds bachelor’s and master’s degrees in Electrical Engineering from McGill University and the University of Montreal.
We will be using Microsoft Teams to facilitate your participation in the upcoming event. You do not need to have an existing Teams account in order to participate in the broadcast – the course will play in your browser and you will have the option of using a microphone to speak with the room and ask questions, or type any questions in via the chat window and our on-site representative will relay your question to the instructor.
- IMPORTANT NOTE: After November 30 you will not be able to join a Teams meeting using Internet Explorer 11. Microsoft recommends downloading and installing the Teams app if possible. You may also use the Edge browser or Chrome.
- You will receive a meeting invitation will include a link to join the meeting.
- Separate meeting invitations will be sent for the morning and afternoon sessions of the course.
- You will need to join the appropriate meeting at the appropriate time.
- If you are using a microphone, please ensure that it is muted until such time as you need to ask a question.
- The remote meeting connection will be open approximately 30 minutes before the start of the course. We encourage you to connect as early as possible in case you experience any unforeseen problems.
Please Note: This event is being conducted entirely online. All attendees will connect and attend from their computer, one connection per purchase. For details please see our FAQ
If you are unable to attend at the scheduled date and time, we make recordings available to all registrants for three business days after the event
EUCI has been accredited as an Authorized Provider by the International Association for Continuing Education and Training (IACET). In obtaining this accreditation, EUCI has demonstrated that it complies with the ANSI/IACET Standard which is recognized internationally as a standard of good practice. As a result of their Authorized Provider status, EUCI is authorized to offer IACET CEUs for its programs that qualify under the ANSI/IACET Standard.
EUCI is authorized by IACET to offer 1.0 CEUs for this course and 0.4 CEUs for the workshop.
This program will use PowerPoint Presentations and group discussions.
Requirements For A Successful Completion Of Program
Participants must log in each day and be in attendance for the entirety of the event to be eligible for continuing education credit
Who Should Attend
- Independent power producers (IPPs)
- Load-serving entities (LSEs) and utilities
- Local distribution companies (LDCs)
- Merchant power ventures
- Merchant transmission providers
- Wholesale trading companies
- Power marketers
- Energy service providers/companies (ESPs/ESCOs)
- Smart grid resource providers
- Demand response providers/aggregators
- Large energy customers
- Consumer advocates
- Regulatory counsel
- State regulatory staff
- Generation bidding
- Asset management
- Marketing and business development
- Financial marketers
- Power trading
- Power supply analyst
- Contract administrators and analysts
- Energy management
- Revenue assurance
- Energy operations and supply
- Retail load supply
- Structured power
- Bulk power
- Energy finance and analysis
- Confirmation administration
- Procurement management