Assessing the impact of loss reduction on distributed generation investment decisions

This paper proposes a methodology for evaluating the impact of loss reduction on DG investment decisions. In this methodology, new analytical expressions are first proposed to quickly capture the optimal power factor of each DG unit to maximize loss reduction. The decision for the optimal location, size and number of DG units is then obtained through a benefit-cost analysis over a given planning horizon. Here, the total benefit includes energy sales and additional benefits, namely loss reduction, network upgrade deferral and emission reduction. The total cost is a sum of capital, operation and maintenance costs. The methodology has been applied to a 69-bus test distribution system. The results show that the additional benefits including loss reduction are imperative. Inclusion of these in the analysis would result in faster DG investment recovery.