Fairness-Regularized DLMP-Based Bilevel Transactive Energy Mechanism in Distribution Systems

Distribution locational marginal pricing can adversely affect users in a grid-constrained transactive distribution system market that are at larger distances from the substation, thereby requiring longer paths to connect to it. When the grid operates closer to its physical limits in terms of line capacities and voltage deviations, these users are more likely to cause grid violations than others in the vicinity of the substation. Conversely, increased energy consumption by users near the substation can choke off supply to those at the grid’s extremities. This research describes a novel mechanism to charge users in a more equitable manner, by regularizing the distribution system operator’s (DSO) social welfare objective function with the Jain’s index of fairness. The overall problem entails the maximization of the regularized objective within a set of linear constraints that ensure that the grid’s physical limits are not violated. Dual decomposition is applied to the constrained optimization problem. The dual variables and unit costs are incrementally updated by the DSO using the augmented Lagrangian method. Simulation results confirm the effectiveness of the proposed approach.