Application of Distribution Locational Marginal Price in optimal simultaneous distributed generation placement and sizing in electricity distribution networks

Distribution Network Operators (DNOs) are being substituted by distribution system operator (DSO). Determining the value of electricity in distribution level is crucial, where decentralized pricing of energy demands careful consideration. Distribution networks with passive players are being altered to distribution systems with proactive market players. The competition among energy suppliers and consumers needs to be assessed by a new entity, executing market procedures and determining the market settlement and clearing price. This paper addresses the optimal distributed generation (DG) placement and sizing problem with the application of Distribution Locational Marginal Price (DLMP) using genetic algorithm (GA). The standard IEEE 33-bus has been employed as an appropriate case study. This novel method aims to reduce the uncertainty, which is inherently imposed by the Renewable Energy Sources (RES) and optimizes network in a cost-effective and reliable manner. The simulation results clarify that the proposed method applied through market operation is more compatible with ongoing distribution systems in comparison with conventional approaches, which are being used by network operators to minimize power loss or maximize voltage stability. Additionally, superiority of the proposed DLMP method over Locational Marginal Price (LMP)-based ranking method and an analytical approach has been proved. Employed approach results in 5% improvement in social welfare of competitive market.