Electricity Markets, Locational Marginal Pricing, and Congestion Hedging: Day-Ahead vs Real-Time Clearing, FTRs, Capacity Markets, Negative Prices, and Virtual Bidding

Deep End Era. Engineering with Sankalp · Oct 29, 2026 · 1h 9m

At two fifteen in the afternoon, two substations just forty miles apart on the same grid have wholesale electricity prices of minus thirty-five dollars per megawatt-hour on the west side of a river and plus one hundred and forty dollars per megawatt-hour on the east side. Nobody is price-gouging—it is the exact Lagrange shadow price of Kirchhoff's voltage law on a congested three-bus triangle. We unpack Locational Marginal Pricing, two-settlement markets, Financial Transmission Rights, capacity markets, and famous market failures from first principles.

Chapters

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