Lost Opportunity Costs Under Ramp Stress: A Comparison of Ramp-Product Dispatch and Look-Ahead Economic Dispatch

Abstract

This paper studies whether ramp-product settlement compensates generators that absorb intertemporal ramp scarcity as effectively as look-ahead economic dispatch. We evaluate this question by comparing the lost opportunity cost (LOC) induced by each approach. Using rolling-horizon simulations on a 10-generator system and a modified RTS-GMLC system, we compare ramp-product settlement (RP-LMP), look-ahead settlement (LA-LMP), and temporal locational marginal pricing (TLMP). In the featured deterministic ramp stressed cases, aggregate LOC is higher under RP-LMP than under LA-LMP. The main contribution is a generator-level critical assessment for ramp-product settlement: we identify which units are left with uncompensated intertemporal opportunity cost under RP-LMP and how that burden changes under LA-LMP. RP-LMP LOC is concentrated on units with repeated ramp-binding exposure, while LA-LMP mainly relieves those same units and leaves smaller residual LOC on other units. Multi-day tests preserve this ordering under perfect foresight in the larger test system, but show that it need not hold under forecast error.