A Direct Calculation of Locational Marginal Value of Distributed Energy Resources
There is a growing world-wide interest in the integration of distributed energy resources (DERs) into electric power grids due to their potential economic and environmental benefits. Broadly defined, a DER represents any electric power resource, such as solar or combined heat and power, installed and operated in the distribution system at voltage levels below the typical bulk power system levels. The increased DER installations provide an opportunity for distribution utilities to view such resources as non-wire alternatives that enable network investment deferrals. However, this brings considerable challenges in the development of methodologies and evaluation algorithms to determine the value of DERs to the distribution grid. In this paper, we provide mathematical formulation for the direct calculation of the value of DERs based on the AC power flow equations. The mathematical framework is incorporated into a generalized algorithm for the assessment of the locational and temporal value of a generic DER to the distribution grid. Preliminary study results are provided to demonstrate the locational nature of the value of DERs and the impact of the magnitude of violations and network losses in the value. The proposed methodology can be applied to any planning horizon and enables the consideration of the DER value in terms of managing voltage levels, circuit power factor, as well as real and reactive power.