Congestion management of deregulated electricity market using locational marginal pricing

In a deregulated power industry, estimation of power price and management of congestion is a major issues handled by market members. Modeling of sensible pricing structure of power systems is important to provide financial signals for electrical utilities. Locational Marginal Pricing technique is used to determine the energy price for transacted power and to manage the system congestion. In this paper Lossless Direct Current Optimal Power Flow is used to find the LMP value at each bus. Resulting optimization problem is solved by Linear Programming. Variation of LMP values with transmission constraint is studied in this paper. Simulation is carried out on IEEE 14 bus test system and obtained result gives the electricity value at each location.