Distribution Locational Marginal Pricing (DLMP) for Congestion Management and Voltage Support

In this paper, a day-ahead market-clearing model for smart distribution systems is proposed. Various types of distributed energy resources (DERs), such as distributed energy storage, distributed generators, microgrids, and load aggregators, can bid into the day-ahead distribution-level electricity market. Considering system Volt/VAR control, network reconfiguration, and interactions with the wholesale market, an optimization model is built to clear the day-ahead market, through which the distribution locational marginal pricing (DLMPs) for both active power and reactive power are determined. Through derivations of the Lagrangian function and sensitivity factors, DLMPs are decomposed to five components (i.e., marginal costs for active power, reactive power, congestion, voltage support, and loss), which provide price signals to motivate DERs to contribute to congestion management and voltage support. Finally, case studies demonstrate the effectiveness of the proposed method.