Distribution LMP-based economic operation for future Smart Grid

A new methodology for calculating the distribution locational marginal prices (D-LMP) with distributed multi-agent paradigm is presented. The proposed D-LMP employs an optimal power flow methodology to evaluate the marginal energy component, especially for renewable generations, as well as the marginal congestion and loss components, which are critical for the valuation and settlement purposes. It is also illustrated that the D-LMP can be used as pricing signal to achieve maximum system social surplus and encourage distributed renewable energy penetration in distribution system.