Sensitivity-based Locational Marginal Value Calculations in Distribution Grids

Electric utilities are experiencing a rapid growth of distributed energy resource (DER)
deployment in their distribution grids. DERs can result in operational challenges in
distribution grids, while at the same time can be viable assets in helping electric utilities
better plan and manage grid design, operation, and planning. The DER valuation becomes
an extremely important factor in this situation to ensure that DERs are fairly and accurately
valued for the services they provide. This paper investigates the idea of spatiotemporal
valuation of DERs and develops a sensitivity-based locational marginal value (LMV)
calculation method that can be solved without the need for solving the network power flow
problem. Furthermore, the impact of cost allocation to various upgrades in the system on
LMV calculation is investigated, with the goal of demonstrating the fairness of the proposed
LMV calculation method. The proposed model is applied to a standard test system for
evaluation and validation.