Distribution Locational Marginal Pricing Under Uncertainty Considering Coordination of Distribution and Wholesale Markets

Abstract

A rapidly growing amount of small-scale distributed energy resources (DERs) integrated into distribution systems call for an effective distribution electricity market to manage the uncertainty of DERs and remove barriers to the participation of DERs in wholesale electricity markets. To this end, this paper proposes an uncertainty-aware distribution locational marginal pricing (DLMP) mechanism based on robust optimization for day-ahead distribution markets within a transmission-distribution coordinated framework. The transmission-level model clears the wholesale market and forms transmission locational marginal prices (LMPs) to price energy, reserve, and uncertainty. At the distribution level, a robust optimization-based DLMP mechanism is proposed that internalizes uncertainties and coordinates with the wholesale market. Besides active and reactive power DLMPs, the uncertainty DLMP is introduced to reward reserve and charge uncertainties. The novel DLMP mechanism provides transparent and comprehensive price signals for managing voltage, congestion, loss, especially uncertainty. The coordinated model is solved in a decentralized manner by heterogeneous decomposition algorithm. Distribution and wholesale markets are integrated through the coordinated mechanism to fully utilize generation resources. Accordingly, DMLPs are highly correlated and consistent with transmission LMPs, and thus allow DERs to participate in wholesale markets. The effectiveness of the proposed method is verified via numerous case studies.