Valuation of distributed energy resources in active distribution networks

Abstract

In concert with the transformation of conventional passive power distribution system, distributed energy resources (DERs) have progressively become participants in the provision of electricity services in active distribution networks (ADNs). In this paper, we propose a systematic valuation process to quantify the value of DERs in the ADN context. The paper first provides comprehensive insights into the impacts of DERs on ADN and the society as a whole. Given the technological, locational, and temporal diversity of DERs, a two-part scheme is developed to value and compensate DER portfolios proposed by customers and independent third parties. In particular, DERs are valued for their benefits and costs in both short and long terms. An integrated resource planning model is formulated to quantify the value of a given DER portfolio to be installed, where bi-level optimization techniques are applied to coordinate decisions on ADN planning and operations. In order to determine the short-term operation benefits of the DER portfolio on a continuous basis, a retail market operation model is developed based on peer-to-peer energy transactions among prosumers, when the impacts of DERs on ADN operations are monetized by distribution locational marginal prices. It is finally concluded in the paper that the proposed valuation scheme will not only contribute to the proactive investment of DERs in ADN but also help enhance the role of DERs in offering affordable, reliable, resilient and sustainable electricity services to customers.