Centralized Optimal Operations of Local Energy Trading Market in Distribution System

Abstract

A local energy trading market (LETM) is a promising market for prosumers who have a photovoltaic (PV) system and want to make a lot of money. When it comes to PV power; however, there are still challenges in market operations. Moreover, the role of a distribution system operator (DSO) in the LETM has not yet been investigated for the centralization of operations to reserve power for PV power uncertainty. Consequently, this paper aims to investigate the effects of PV power uncertainty on the settlement process by proposing centralized optimal operations of the LETM. Furthermore, the DSO is tasked with determining a distribution locational marginal price at each bus in the distribution system, besides analyzing the bus voltage and line current limits. When power is exchanged, the DSO must reserve power to account for the uncertainty of PV power to recover the power balance. The proposed method is formulated as an optimization problem, to maximize the difference between buyers’ and sellers’ total operating costs, because this maximum value could reflect the maximum benefit obtained by each market participant. Additionally, the proposed method’s effectiveness is demonstrated on a typical low-voltage distribution system in Thailand. The simulation results show that the total benefit of market participants with PV power uncertainty is reduced, whereas that of the DSO is increased. This implies that prosumers will miss out on a lucrative opportunity if they do not improve their forecasting system.