A hierarchical dispatch structure for distribution network pricing

This paper presents a hierarchical dispatch structure for efficient distribution network pricing. The dispatch coordination problem in the context of hierarchical network operators are addressed. We formulate decentralized generation dispatch into a bilevel optimization problem in which main network operator and the connected distribution network operator optimize their costs in two levels. By using Karush-Kuhn-Tucker conditions and Fortuny-Amat McCarl linearization, the bilevel optimization problem is reduced into a mixed-integer linear programming (MILP) problem. Equivalence between proposed hierarchical dispatch and centralized dispatch is proved. The model is solved in GAMS platform. IEEE 14-bus meshed network and IEEE 13-node radial network are connected to be an illustrative example offering numerical dispatch results. Three scenarios representing distributed generation (DGs) successive development stages are analyzed. Hierarchical dispatch achieves same results as traditional centralized dispatch in the three considered scenarios. Distribution network nodal prices are obtained. Intrinsic advantages of the proposed hierarchical dispatch are to reduce the dispatch complexity with increasing DGs penetration and provide distribution locational marginal prices (DLMP).