Extended Locational Marginal Price: A Linear Relaxation Pricing Method Based on Convex Hull of Unit Commitment and Its Applications in Electricity Spot Market

The electricity spot market is a critical element in developing an electricity market system and its open, competitive, and orderly operation. An appropriate pricing mechanism is basic for reflecting the commodity nature of electricity, thereby guiding the resource allocation, and eventually enhancing the operational efficiency. However, the essence of electricity spot market clearing centers on solving unit commitment, whose inherent non-convexity leads to the locational marginal pricing based on security-constrained economic dispatch, generating significant uplift costs. These uplift costs may define different costs for the same services, introducing market discrimination and ultimately affecting market fairness. In response to these challenges, this paper delves into the theoretical foundations and application limitations of this locational marginal pricing and then proposes a method to alleviate the obvious impact of non-convex costs on market fairness. Specifically, the paper introduces a linear relaxation pricing method based on the convex hull of unit commitment, which theoretically shown to be effective in reducing total uplift costs and achieving market fairness, thereby expanding its applications. Finally, this proposed linear relaxation pricing method based on the convex hull of unit commitment is applied to the modified IEEE-30 test system and the Polish-2383 test system, whose numerical simulations are utilized to validate its effectiveness.