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Consistency of Energy-Related Opportunity Cost Calculations

By Bhavana Keshavamurthy


Overview The definition of Lost Opportunity Cost (LOC) according to the PJM dictionary is "The difference in net compensation from the Energy Market between what a unit receives when providing regulation or synchronized reserve and what it would have received for providing energy output. ” xiii While this definition provides a broad based description of LOC, the implementation of LOC is different across the different PJM Markets. This document aims at summarizing the commonalities and differences between LOC calculations in the different markets. This document will focus on these main areas: – How energy lost opportunity cost values are calculated in reserve markets where LOC is a component of the clearing pric

Year: 2013
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