LMP computation at DG buses in radial distribution system

Abstract

Purpose– Thepurpose of this paper is to estimate the locational marginal price (LMP) at each distributed generation (DG) bus based on DG unit contribution in loss reduction. This LMP value can be used by distribution company (DISCO) to control private DG owners and operate network optimally in terms of active powerloss. Design/methodology/approach– This paper proposes proportional nucleolus game theory (PNGT) based iterative method to compute LMP at each DG unit. In this algorithm, PNGT has been used to identify the share of each DG unit in loss reduction. New mathematical modeling has been incorporated in the proposed algorithmto computeincentives beinggiven to each DGowner. Findings– The findings of this paper are that the LMP and reactive power price values for each DG unit were computed by the proposed method for the first time. Network can be operated with less loss and zero DISCO’s extra benefit, which is essential in deregulated environment. Fair competition has been maintained amongprivateDGownersusingtheproposedmethod. Originality/value– PNGT has been used for the first time for computation of LMP in distribution system based on loss reduction. Incentives to each DG unit has have been computed based on financial savings of DISCO due to loss reduction. Share of active and reactive power generation of each DG unit on change in active power loss of network due to that DG unit has been computed with new mathematical modeling. The proposed method provides LMPvalue to eachDGunit in such a waythatthe networkwill be operated with less loss.