Optimal Planning Strategy for Distributed Energy Resources Considering Structural Transmission Cost Allocation

A well-designed transmission cost allocation (TCA) scheme is able to reflect each consumer's contributions to the actual usage of transmission assets, thereby generating fair price signals to guide consumers in making investments. In this paper, an optimal planning strategy and a model for distributed energy resources (DERs) are formulated, considering structural TCA. In the proposed TCA scheme, the transmission costs are identified according to the actual usage of transmission assets under different conditions. The effects of DERs on TCA are considered. Because the DERs have a fast-response capability at each time slot, DERs are able to provide power support for the bulk power system in an emergency and thus can efficiently reduce the peak loads of the system and relieve the congestion of transmission assets. This grid-friendly manner allows lower transmission prices, thereby decreasing the DER operators' transmission costs. Therefore, by strategically investing in and operating DERs, consumers can reduce their electricity energy cost and transmission cost and maximize long-term revenue. To address the uncertainties of load growth and distributed energy fluctuation, stochastic programming is adopted. Restricted by the non-analytical mapping between transmission prices and planning strategies, an algorithm is presented to iteratively solve the problem. Case studies based on a 3-bus test system and IEEE 118-bus system with various DERs verify the effectiveness of the proposed scheme.