Distribution Market Including Prosumers: An Equilibrium Analysis

Abstract

We consider a distribution system including a supplying utility, prosumers, and conventional consumers, interacting through a distribution market. In such a market, each prosumer, seeking its maximum profit, uses an optimization problem to determine its hourly production/consumption, and the distribution market operator uses a minimum social-cost problem from which hourly locational marginal prices (LMPs) are derived. Conventional consumers accept these prices and the supplying utility sell energy at given prices at the substation bus. Since these problems (those of the prosumers and the one of the operator) are interdependent, they need to be jointly considered and solved, which constitutes an equilibrium problem. We show that such equilibrium problem is equivalent to an optimization one, solve it, and analyze outcomes using a realistic distribution system. We extract conclusions of the potential impact of this distribution market on the financial outcomes of the utility, the prosumers and the conventional consumers.