TY - JOUR
T1 - Pricing Mechanism for Flexible Loads Using Distribution Grid Hedging Rights
AU - Hanif, Sarmad
AU - Creutzburg, Philipp
AU - Gooi, H. B.
AU - Hamacher, Thomas
N1 - Publisher Copyright:
© 1969-2012 IEEE.
PY - 2019/9
Y1 - 2019/9
N2 - 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 local market and clears distribution locational marginal prices (DLMPs). Aggregators purchase energy based on these DLMPs. However, depending upon grid conditions (losses/congestion), the DLMP value increases, causing aggregators to bear high energy procurement cost. To mitigate this issue, a second layer is introduced to compute ex-ante scenario-based Hedging Rights. Through a combination of these two layers, the proposed mechanism 1) improves market competition among the involved entities, 2) maintain the congestion alleviation property of DLMPs, and 3) incorporate the intertemporal energy requirements of flexible loads. The proposed framework is tested on an IEEE benchmark distribution grid. The simulation results show that the proposed pricing mechanism allows aggregators to achieve higher cost-savings, while preserving physical power flow evaluation feature of DLMP.
AB - 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 local market and clears distribution locational marginal prices (DLMPs). Aggregators purchase energy based on these DLMPs. However, depending upon grid conditions (losses/congestion), the DLMP value increases, causing aggregators to bear high energy procurement cost. To mitigate this issue, a second layer is introduced to compute ex-ante scenario-based Hedging Rights. Through a combination of these two layers, the proposed mechanism 1) improves market competition among the involved entities, 2) maintain the congestion alleviation property of DLMPs, and 3) incorporate the intertemporal energy requirements of flexible loads. The proposed framework is tested on an IEEE benchmark distribution grid. The simulation results show that the proposed pricing mechanism allows aggregators to achieve higher cost-savings, while preserving physical power flow evaluation feature of DLMP.
KW - Distribution locational marginal prices (DLMPs)
KW - flexible loads
KW - hedging rights (HRs)
KW - revenue adequacy
UR - http://www.scopus.com/inward/record.url?scp=85050993043&partnerID=8YFLogxK
U2 - 10.1109/TPWRS.2018.2862149
DO - 10.1109/TPWRS.2018.2862149
M3 - Article
AN - SCOPUS:85050993043
SN - 0885-8950
VL - 34
SP - 4048
EP - 4059
JO - IEEE Transactions on Power Systems
JF - IEEE Transactions on Power Systems
IS - 5
M1 - 8424037
ER -