Using distribution LMP and time-of-delivery pricing to promote optimal placement and increased profitability of residential PV systems

In order to stimulate continued expansion of residential PV in the future, PV should be reimbursed for the benefits it provides to the grid with local distributed generation. This includes market mechanisms to compensate for the time-of-delivery (TOD) of the solar energy and the location of the injection using distribution locational marginal prices (DLMP´s). The benefits of using TOD pricing is analyzed for three LMP nodes in NYISO for the real-time and the day-ahead markets for 2011. A local distribution system market is demonstrated with varying DLMP prices that depend on distribution system losses. The DLMP´s change with local generation, substation price curves, time of day, line losses, and feeder load. Such a market allows the PV owner to be reimbursed appropriately for a reduction in system losses and allows PV to naturally be installed in the optimal locations due to the pricing mechanism.