Probabilistic locational marginal price computation in radial distribution system based on active power loss reduction

Abstract

This study presents a probabilistic approach to calculate locational marginal price (LMP) at distributed generation (DG) buses in an electric power distribution system to ensure that the network operates at reduced active power losses (APLs). The proportional nucleolus theory-based iterative method is proposed as a deterministic approach to compute LMP based on APLs. Uncertainties in load and market price were captured by using a 2 m + 1 scheme of the point estimation method. To compute the contribution of the reactive and active power of the DG on the APL of the network, loss sensitivity factors have been developed. The proposed method provides an active power price in terms of LMP and reactive power price to each DG as per its contribution to loss reduction. To verify the performance of the proposed method, it was implemented on the Taiwan Power Company distribution system. The proposed method can be utilised by a distribution company to operate the network at reduced APL and improve the benefit of DG owners.