Fast Locational Marginal Pricing for Congestion Management in a Distribution Network with Multiple Aggregators

Abstract

Locational Marginal Pricing (LMP) is widely used to perform congestion management in the interaction between electricity wholesale markets and transmission networks. However, the algorithm does not scale well with the number of network nodes, posing a challenge for its use for the distribution network. The problem is further complicated when multiple aggregators need to be balanced simultaneously while jointly respecting the constraints in the network. This paper proposes a fast LMP algorithm, which solves these problems. Separation of concerns between trade and grid operation is realised through an agent model, using a negotiation mechanism to reach an efficient utilisation of network capacities. Simulations with a simple network are presented to demonstrate the working principle of the algorithm.