Update about System Marginal Price (SMP)

system marginal price
system marginal price

What is the System Marginal Price?

We can discuss SMP in different ways, but we follow an easy way to understand SMP. The clearing price for the electricity market for a given period at a place is known as the System Marginal Price (SMP). It is the rate at which the real-time wholesale electricity market sets prices to balance supply and demand. The marginal price of the most costly generator required to meet needs at any given time determines the SMP. The “marginal unit” is the name given to this generator.

Definition of SMP:

The uniform price that shows how short-term supplies and demand are connected in power markets is called the system marginal price (SMP). A computer model built around grey theory was suggested to predict SMP accurately. Using the accumulated generating operation (AGO), the model can handle original data that isn’t regular and get regular results. Based on the regular results, it is possible to set up a computational real-time forecasting system.

Based on specific data from the California power market, MATLAB was used for tests and simulations. Because weekends and workdays might be different, two data types were chosen randomly to be calculated. The results show that the model can give applications a lot of freedom. People in southwestern China have used the forecasting system in the power market. Which is reliable, accurate, and able to work in real time.

How does SMP Work?

According to the Alberta Electric System Operator (AESO), the Market is a competitive wholesale electricity market that determines the SMP in Alberta. Every five minutes, the AESO’s real-time market balances the supply and demand for electricity. The marginal price unit of electricity dispatched to meet demand is determined by bidding, and this price is used to set the SMP.

It shows the current state of supply and demand in the short term, the SMP is an important market price signal. It plays a role in calculating the profits of power producers and market players and can impact investment choices in the industry. Fuel costs, generation resource availability, transmission constraints, and total electricity demand are some variables that can cause the SMP to change.

Price Update of System Marginal Price (SMP):

The system marginal price (SMP) shows the electricity price in a minute. When everything runs normally, SMP is the offer price of the most expensive offer block. That would be sent out to meet an extra 1 MW of demand every minute, excluding imports and exports. The Pool Price is the simple average of the system’s best price over sixty minutes in a settlement interval. When the SMP changes, a new copy is made public.

SMP is set at $1000/MWh when a supply shortfall and system controllers must shed a firm load during Energy Emergency Alert-3 events. When there is more MWh of generation than demand, the price is $0.0/MWh. When the ISO says that the market isn’t open for business, the system’s marginal cost is set by sending out orders. The most recent and reasonably accurate merit orders the ISO has access to.


This report gives the current SMP and a history of the last three hours. This report has the SMP, the time it is made public, and the number of bids that set the price. All of the Bid information is shown in red text. The information about the Offer is shown in black text. The block that is currently being sent is highlighted in blue.

Remembering regulations, laws, and entities related to power regulation can change over time is crucial. It is advisable to consult these organizations’ websites—the official sources for Alberta’s latest and most comprehensive information on power regulation.

Read more about Price Update!


Please enter your comment!
Please enter your name here