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Historical data (top) and scenarios (bottom) for wholesale market (spot) prices for weeks 2 and 3 of Jan. 2016; scenarios' mean in black and the 95% interval in grey.
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This paper proposes a new pricing mechanism for the integration of flexible loads in distribution grids. This price is calculated from an envisioned two-layer local distribution grid market, where flexible load aggregators are price takers and the distribution system operator (DSO) is the market operator. On a day-ahead basis, the DSO runs the loca...
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... the procedure for generating price scenarios can be summarized as: i) a set of demand scenarios for the considered time span is generated using (7) and then ii) price scenarios are generated using (8) by incorporating demand scenarios obtained from the above step. Figure 2 shows exemplary price scenarios generated from the above explained procedure. In order to reduce the computational burden of the HRs calculation problem (to be introduced in (9)), scenario reduction is performed. ...
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Flexible electric load control is an important tool for the future power system in the face of recent challenges to the electric grid. This paper presents a control framework for combining optimal load scheduling for flexible loads, a dualised worst-case formulation of the uncertain disturbance prediction errors and reserve scheduling via a dualise...
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... In this methodology, USEF addresses congestion management or grid-capacity management through congestion points that are published by the DSOs and exploited by the aggregators. A recent study [21] introduces a pricing mechanism where the DSO runs the local day-ahead market data, and the aggregators purchase energy based on the distribution locational marginal prices that depend upon grid conditions (losses/congestion). An interplay model for energy flexibility management through end-users, aggregators and DSO is proposed in [22]. ...
Unlocking flexibility on the demand side is a prerequisite for balancing supply and demand in distribution networks with high penetration levels of renewable energy sources that lead to high volatility in energy prices. The main means of fully gaining access to the untapped flexibility is the application of demand response (DR) schemes through aggregation. Notwithstanding, to extract the utmost of this potential, a combination of performance-, financial-, and technical-related parameters should be considered, a balance rarely identified in the state of the art. The contribution of this work lies in the introduction of a holistic DR framework that refines the DR-related strategies of the aggregator towards optimum flexibility dispatch, while facilitating its cooperation with the distribution system operator (DSO). The backbone of the proposed DR framework is a novel constrained-objective optimisation function which minimises the aggregator’s costs through optimal segmentation of customer groups based on fairness and reliability aspects, while maintaining the distribution balance of the grid. The proposed DR framework is evaluated on a modified IEEE 33-Bus radial distribution system where a real DR event is successfully executed. The flexibility of the most fair, reliable and profitable sources, identified by the developed optimisation function, is dispatched in an interoperable and secure manner without interrupting the normal operation of the distribution grid.
... A few studies have proposed mechanisms to mitigate such an issue. In [158], hedging rights were utilized to mitigate the undesirable effects of increased DLMP to aggregators. In [159], Jain's fairness index was applied in the DLMP mechanism to achieve fair cost allocation. ...
Traditionally, the electric distribution system operates with uniform energy prices across all system nodes. However, as the adoption of distributed energy resources (DERs) propels a shift from passive to active distribution network (ADN) operation, a distribution-level electricity market has been proposed to manage new complexities efficiently. In addition, distribution locational marginal price (DLMP) has been established in the literature as the primary pricing mechanism. The DLMP inherits the LMP concept in the transmission-level wholesale market, but incorporates characteristics of the distribution system, such as high R/X ratios and power losses, system imbalance, and voltage regulation needs. The DLMP provides a solution that can be essential for competitive market operation in future distribution systems. This paper first provides an overview of the current distribution-level market architectures and their early implementations. Next, the general clearing model, model relaxations, and DLMP formulation are comprehensively reviewed. The state-of-the-art solution methods for distribution market clearing are summarized and categorized into centralized, distributed, and decentralized methods. Then, DLMP applications for the operation and planning of DERs and distribution system operators (DSOs) are discussed in detail. Finally, visions of future research directions and possible barriers and challenges are presented.
... A few studies have proposed mechanisms to mitigate such an issue. In [158], hedging rights were utilized to mitigate the undesirable effects of increased DLMP to aggregators. In [159], Jain's fairness index was applied in the DLMP mechanism to achieve fair cost allocation. ...
Traditionally, the electric distribution system operates with uniform energy prices across all system nodes. However, as the adoption of distributed energy resources (DERs) propels a shift from passive to active distribution network (ADN) operation, a distribution-level electricity market has been proposed to manage new complexities efficiently. In addition, distribution locational marginal price (DLMP) has been established in the literature as the primary pricing mechanism. The DLMP inherits the LMP concept in the transmission-level wholesale market but incorporates characteristics of the distribution system, such as high R/X ratios and power losses, system imbalance, and voltage regulation needs. The DLMP provides a solution that can be essential for competitive market operation in future distribution systems. This article first provides an overview of the current distribution-level market architectures and their early implementations. Next, the general clearing model, model relaxations, and DLMP formulation are comprehensively reviewed. The state-of-the-art solution methods for distribution market clearing are summarized and categorized into centralized, distributed, and decentralized methods. Then, DLMP applications for the operation and planning of DERs and distribution system operators (DSOs) are discussed in detail. Finally, visions of future research directions and possible barriers and challenges are presented.
... One of the main challenges with the use of DLMP is the adequate consideration of fairness among prosumers given the radial nature of distribution networks. While this was addressed in [13,14], these studies are only applicable to very specific operation modes for prosumers. Furthermore, most DLMP studies do not consider the unbalanced nature of distribution networks which needs explicit three-phase models to adequately cater for voltages as well as prosumers (e.g., single-phase connections). ...
The number of residential consumers with solar PV and batteries, aka prosumers, has been increasing in recent years. Incentives now exist for prosumers to operate their batteries in more profitable ways than self-consumption mode. However, this can increase prosumer exports or imports, resulting in power flows that can lead to voltage and thermal limit violations in distribution networks. This work proposes a framework for Distribution Network Operators (DNOs) to ensure the integrity of MV-LV networks by using dynamic operating limits for prosumers. Periodically, individual prosumers send their intended operation (net exports/imports) as determined by their local control to the DNO who then assesses network integrity using smart meter data and a power flow engine. If a potential violation is detected, their maximum operating limits are determined based on a three-phase optimal power flow that incorporates network constraints and fairness aspects. A real Australian MV feeder with realistically modelled LV networks and 4,500+ households is studied, where prosumers' local controls operate based on energy prices. Time-series results demonstrate that the proposed framework can help DNOs ensure network integrity and fairness across prosumers. Furthermore, it unlocks larger profitability for prosumers compared with the use the 5kW fixed export limit adopted in Australia.
... In contrast to the Cournot model is the Bertrand model, which expresses the markets in which companies must first establish the price and customers will then determine each company's production rate by their selection [13]. References [14,15] have adopted the PQC model to study this issue. Additionally, the MSF method has been used to model the customer's behavior in the competitive environment of retail electricity in references [16][17][18]. ...
Establishing a retail market and formulating customers' choices improves market competitiveness in a restructured system. Competition among retailers increases the choices and enhances the economic interest of the consumers. This paper presents a competition model in the retail market based on the Bertrand game. Unlike most of the recent studies, in this paper, the effect of distribution line constraints is considered on competitive prices. Moreover, a learning-based method called adaptive expectations is presented for the retailers with lower market potential, to improve their performance in an oligopolistic market. The results show that the capacity of distribution network lines directly affects the level of competition among retailers. The line constraints may change the situation to the advantage of or at the disadvantage of one or more retailers in the market. The learning method used in the paper has expressed itself as improving the retailers' profit with a smaller market potential of up to 20%, while other retailers experience declining profits.
... However, a great challenge remains in defining an applicable financial product that enables risk trading. Here, [21] studies a local energy market on the distribution system level, i.e., a market organization layer above energy communities, where financial hedging rights are proposed to reduce the price volatility due to distribution network constraints. Moreover, [22] considers the simultaneous trading of energy and the uncertain part of power generation by PV systems. ...
... Moreover, [22] considers the simultaneous trading of energy and the uncertain part of power generation by PV systems. Note that financial products proposed by [21] and [22] leave the market partially incomplete for risk [23]. ...
... where Φ = {a nω , φ ρ n , χ ρ nω , b ω , φ ar , χ ar ω }. Parameters denoted by (·) * correspond to values obtained from the risk-averse social planner problem (21). The first line of the objective function (22a) corresponds to Arrow-Debreu security trades by risk-averse prosumers, while the second line refers to the spatial arbitrageur's trades. ...
Local energy communities are proposed as a regulatory framework to enable the market participation of end-consumers. However, volatile local market-clearing prices, and consequently, volatile cost give rise to local market participants with generally heterogeneous risk attitudes. To prevent the increased operational cost of communities due to conservative trading decisions in the forward stage, e.g., a day-ahead market, we propose risk trading in energy communities via financial hedging products, the so-called Arrow-Debreu securities. The conditional value-at-risk serves as our risk measure for players to study different degrees of market completeness for risk. We define a risk-averse Nash game with risk trading and solve the Nash equilibrium problem for an incomplete market for risk as a mixed complementarity problem. We show that such a Nash equilibrium problem reduces to a single optimization problem if the market is complete for risk. Numerical findings indicate that a significant community cost saving can be realized when players engage in risk trading and sufficient financial hedging products are available. Moreover, risk trading efficiently protects less risk-averse players from highly risk-averse decision making of rival players.
... In the work of [13], the authors proposed an innovative economic and engineering coupled framework to encourage typical flexible loads or load aggregators, such as parking lots with a high penetration of electric vehicles, to participate in the real-time retail electricity market based on an integrated e-voucher program directly. In order to integrate the flexible load in the distribution network, a new pricing mechanism was proposed in the literature [14]. The price can be calculated through the two-tier local distribution network market. ...
... P con, j,t = TP con,j −τ%P con,j ≤ ∆P con,j,t ≤ −τ%P con, j t ∈ T con,j (14) where ∆P con,j,t is the transfer amount of the convertible load at the time T of the node j. If it is positive, the load is transferred to time T, and if it is negative, the load is transferred from time T. The first equation is the transferable load total constraint, the second inequality is the upper and lower bounds of the transfer amount, and T con, j is the convertible interval. ...
... In the safety checking of the power grid, the participation of the load reduction should be considered, and the maximum reduction is 20% [14]. As shown in Figure 12, the 76th line exceeds the limit, and the limit is 196 MW. ...
Flexible loads have flexibility and variability in time and space, and they have been widely studied by scholars. However, the research on the participation of flexible loads in market clearing and safety checking is still insufficient. We propose a market clearing and safety checking method for multi-type units that considers flexible loads. First, the flexible load is divided into reducible loads, shiftable loads, and convertible loads, and its mathematical model is established. Then, the convertible loads are considered in the market clearing model, and the power management agency executes the market clearing procedure to obtain the clearing result. When the line power exceeds the limit as a result of clearing, the power flow of the branches and sections is eliminated by adjusting the unit output and reducing the flexible load at the same time, and a safety checking model considering load reduction is established. The marginal electricity price of the nodes is obtained by the interior point method, and we solve the model by calling the CPLEX (v12.7.1) solver in GAMS (General Algebraic Modeling System v24.9.1). We use a regional power grid of 220 kV and above as an example for analysis; the results show that the proposed method can reduce the marginal electricity price of the nodes, reduce the cost of safety checking, and improve the safety of the market clearing.
... To address this, there is a pressing need for more dynamic mechanisms to deal with price hedging. In relation to price hedging, the work in [32] investigated the possibility of using distribution grid hedging rights as a financial tool to reduce price volatility. Through the proposed hedging rights, market participants such as aggregators that are exposed to price spikes due to grid congestions can use this tool to mitigate the adverse effects of high prices, thereby maintaining their competitiveness in local electricity markets. ...
Recently, given the increased integration of renewables and growing uncertainty in demand, the wholesale market price has become highly volatile. Energy communities connected to the main electricity grid may be exposed to this increasing price volatility. Additionally, they may also be exposed to local network congestions, resulting in price spikes. Motivated by this problem, in this paper, we present a coordination mechanism between entities at the distribution grid to reduce price volatility. The mechanism relies on the concept of duality theory in mathematical programming through which explicit constraints can be imposed on the local electricity price. Constraining the dual variable related to price enables the quantification of the demand-side flexibility required to guarantee a certain price limit. We illustrate our approach with a case study of a congested distribution grid and an energy storage system as the source of the required demand-side flexibility. Through detailed simulations, we determine the optimal size and operation of the storage system required to constrain prices. An economic evaluation of the case study shows that the business case for providing the contracted flexibility with the storage system depends strongly on the chosen price limit.
... Hence, the proposed method achieves the overall market equilibrium of the system, while promoting the autonomy of each region. 4) Formulation Compatibility: Using linearized power flow formulations, related works exist in the form of i) proposing day-ahead markets with uncertain inter-temporal flexible loads [12] and ii) fairness-based pricing to improve the participation of market entities in DLMP programs [34], [35]. Since linearized AC power flow formulation is also deployed in the proposed CAST algorithm, these methods can be incorporated into the proposed CAST algorithm. ...
... Since linearized AC power flow formulation is also deployed in the proposed CAST algorithm, these methods can be incorporated into the proposed CAST algorithm. Note that, in [12], [34], [35], network sensitivities are estimated based on DC power flow. Consequently, the resultant constraints for calculating DLMPs in [12], [34], [35] are exactly similar to (10). ...
... Note that, in [12], [34], [35], network sensitivities are estimated based on DC power flow. Consequently, the resultant constraints for calculating DLMPs in [12], [34], [35] are exactly similar to (10). However, as compared to DC power flow, the AC power flow adopted in this paper is much more accurate in representing grid conditions [20] and consequently in calculating DLMPs [7]. ...
A novel real-time distributed market framework at the distribution grid level is proposed in this work. The framework coordinates information in a hierarchical manner, while aiming to achieve consensus by sharing physically coupled information among multiple regional operators. In principle, each region maximizes its individual social-welfare problem, which is the local (regional) version of the overall social-welfare maximization of the distribution grid. The individual problem incorporates the coupled physical information from its neighboring regions. The consensus among all regions is then enforced through the proposed Consensus-Alternating direction method of multipliers Structured Trust-region (CAST) algorithm. Upon achieving convergence, the distribution locational marginal price (DLMP) is recovered for each region, which is novel in a sense that on one hand it is computed in a distributed manner, i.e. with preserving local information, and on another hand it accurately represents loss allocation from its neighboring regions. The proposed methodologies are tested on an IEEE 33-bus distribution grid and on a 144-bus network with 5 regions.
... As a consequence of this transformation, new market pricing mechanisms that can facilitate the efficient and reliable operation of the grid are being investigated. In this line of research, pricing based on distribution locational marginal price (DLMP) has been widely studied and proposed [2][3][4][5][6][7][8][9][10]. However, it has been shown in several studies that adopting such market-based mechanisms in a distribution system with a high deployment of price-responsive DERs can adversely affect the distribution system operation by causing congestions [2,11]. ...
... The line losses are given by (6), (7) and nodal voltage constraint is enforced by (8). The megavolt ampere (MVA) limit constraint of each line j in phase / is given by the quadratic constraint in (9). The three-phase real and reactive power imbalance is restricted to a small percentage ðD/ p ; D/ q Þ at the substation level and imposed by (10), (11) between any two phases. ...
This paper proposes a coordinated two-stage real-time market mechanism in an unbalanced distribution system which can utilize flexibility service from home energy management system (HEMS) to alleviate line congestion, voltage violation, and substation-level power imbalance. At the grid level, the distribution system operator (DSO) computes the distribution locational marginal prices (DLMP) and its energy, loss, congestion, and voltage violation components through comprehensive sensitivity analyses. By using the DLMP components in a first-stage optimization problem, the DSO generates two price signals and sends them to HEMS to seek flexibility service. In response to the request of DSO, each home-level HEMS computes a flexibility range by incorporating the prices of DSO in its own optimization problem. Due to future uncertainties, the HEMS optimization problem is modeled as an adaptive dynamic programming (ADP) to minimize the total expected cost and discomfort of the household over a forward-looking horizon. The flexibility range of each HEMS is then used by the DSO in a second-stage optimization problem to determine new optimal dispatch points which ensure the efficient, reliable, and congestion-free operation of the distribution system. Lastly, the second-stage dispatch points are used by each HEMS to constrain its maximum consumption level in a final ADP to assign consumption level of major appliances such as energy storage, heating, ventilation and air-conditioning, and water heater. The proposed method is validated on an IEEE 69-bus system with a large number of regular and HEMS-equipped homes in each phase.
