Locational marginal burden: Quantifying the equity of optimal power flow solutions

TL;DR

This paper introduces locational marginal burden (LMB), a novel metric linking optimal power flow solutions with energy equity, enabling quantification of how power system operations impact the fairness of electricity prices.

Contribution

It proposes a new method to quantify energy burden equity by differentiating locational marginal prices with respect to demand using optimization theory.

Findings

LMB offers new insights into energy price equity in power systems.

Application to a Hawaii network demonstrates LMB's practical utility.

LMB helps identify how network operation influences energy burden distribution.

Abstract

Fair distribution of benefits in electric power systems is a pertinent energy policymaking problem; however, these efforts cannot be easily quantified in power system engineering studies. Therefore, we propose locational marginal burden (LMB) to provide an interface between a well-studied measure of energy pricing equity, energy burden, with an optimal power flow problem (OPF). This is achieved by investigating the intrinsic link between the dual optimal solution of an OPF problem and the electricity prices, which are used to calculate the energy burden. By applying results from the field of differentiable optimization, locational marginal prices (LMPs) associated with an OPF solution can be differentiated with respect to demand. This enables electricity retail prices, and thereby, energy burden itself, to be differentiated, resulting in the proposed LMB. Simulation of a synthetic Hawaii network interfaced with real-world socioeconomic data shows how the LMB provides new insights into how the operation of the electricity network affects the equity of energy prices.