The validity of a locational marginal price on variable power injections in energy and regulation markets

•A locational price for variable power injections on the transmission system is introduced.•This price is based in marginal pricing theory and follows similar intuition as wholesale locational marginal prices.•Fluctuations in power generation and load are included in co-optimized energy and frequency regulation markets using chance constraints.•A regulation market settlement policy which uses the introduced price as the market clearing price is proposed.