Price discovery in dynamic power markets with low-voltage distribution-network participants

We focus on extending Locational Marginal Price (LMP) principles to (i) incorporate marginal costs of real and reactive power, line losses, voltage control, and distribution asset life degradation, and (ii) to enable distribution network connected loads and generators to participate in marginal cost based real and reactive power transactions. To this end, we define a distribution market that can discover spatiotemporal real and reactive power prices dynamically to optimize cost and utility of distributed generation assets, consumers, transformer and other asset life degradation, line losses, and voltage control, while observing full AC load flow constraints. We solve the socially optimal day-ahead market (DAM) clearing problem on a distribution feeder containing industrial, commercial and residential sub-feeders serving conventional non-elastic and flexible reschedulable loads and featuring devices capable of using excess capacity relative to their primary use to provide VAr compensation and voltage support. Numerical results on several DAM clearing scenarios elaborate the value of a fully functional distribution market in providing efficient operation incentives, intertemporal scheduling of demand and optimal location signals to distributed renewable generation and last but not least distribution network rent.